introduction, functions of RBI

2. Introduction : RBI @ glance
 RBI is the nations central bank
 Managed by central board of directors
 Country’s monetary authority
 Banker to banks
 Manager of foreign exchange reserves
 Issuer of currency

3. History :
 origin of RBI traced to 1926 – Royal commission on Indian currency and
finance (Hilton young commission) – recommended the creation of
central bank
1934
• Reserve bank of india act
1935
• Start of operations April,1
1949
• Nationalization of RBI

4. Objectives of RBI :
 To regulate the issue of bank notes & the keeping of reserves with a
view of securing monetary stability in India & generally to operate the
currency and credit system of country to its advantage
 It is essential to have a modern monetary policy framework to meet
the challenge of an increasingly complex economy and the primary
objective of the monetary policy is to maintain price stability while
keeping in mind the objective of growth
(Section 17, Reserve bank of india act, 1934)

5. Organisational structure :
Central board of directors
Governor
Deputy governor
Executive director
Principle chief general manager
Chief general manager
General manager
Deputy general manager
Assistant general manager
Manager
Assistant manager
Support staff

6. Functions of RBI :
 Monetary Authority
 Issuer of Currency
 Banker and Debt Manager to
Government
 Banker to Banks
 Regulator of the Banking System
 Manager of Foreign Exchange
 Regulator and Supervisor of the
Payment and Settlement Systems
 Developmental Role

7. Monetary authority
GOAL : achieving specific economic objectives, such as low
and stable inflation and promoting growth
The main objectives of monetary policy in India are:
Maintaining price stability, Ensuring adequate flow of credit
to the productive sectors of the economy to support
economic growth, Financial stability
Issuer of currency
The Reserve Bank is the nation’s sole note issuing authority.
Along with the Government of India, responsible for the
design and production and overall management of the
nation’s currency, with the goal of ensuring an adequate
supply of clean and genuine notes. The Reserve Bank also
makes sure there is an adequate supply of coins, produced
by the government.

8. Banker & debt manager to government
Managing the government’s banking transactions,
governments need a banker to carry out their financial
transactions in an efficient & effective manner, the raising of
resources from the public. The Reserve Bank maintains its
accounts, receives money into & makes payments out of
these accounts & facilitates the transfer of government funds.
Banker to banks
Banks need their own mechanism to transfer funds and settle
inter-bank transactions—such as borrowing from and lending
to other banks—and customer transactions. In effect, all
banks operating in the country have accounts with the
Reserve Bank, just as individuals and businesses have
accounts with their banks

9. Manager of foreign exchange :
Regulating transactions related to the external sector and
facilitating the development of the foreign exchange
market. Ensuring smooth conduct and orderly conditions in
the domestic foreign exchange market. Managing the
foreign currency assets and gold reserves of the country
Regulator and Supervisor of the
Payment and Settlement System: The
Payment and Settlement Systems Act of 2007 (PSS Act)
gives the Reserve Bank oversight authority, including
regulation and supervision, for the payment and settlement
systems in the country. In this role, the development and
functioning of safe, secure and efficient payment and
settlement mechanisms

10. Regulator of banking system: Banks are
fundamental to the nation’s financial system. The central
bank has a critical role to play in ensuring the safety and
soundness of the banking system & in maintaining financial
stability and public confidence in this system. The Reserve
Bank protects the interests of depositors, ensures a
framework for orderly development & conduct of banking
operation

11. “There have been three great inventions since the beginning of
time: fire, the wheel and central banking”
– Will Rogers