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INTRODUCTION It is the central bank of India Its headquarter is in Mumbai Its present governor is Dr.D.Subbarao It has 22 regional offices most of them are in state capitals. Website:http://www.rbi.org.in

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BRIEF HISTORY ( 1 OF 2) It was setup on the recommendation of Hilton Young commission. It was started as shareholders bank with a paid up capital of 5 crores. Initially it was located in Kolkata. It moved to Mumbai in 1937. Initially it was privately owned.

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BRIEF HISTORY (2 OF 2) Since nationalization in 1949,the reserve bank is fully owned by the Govt. of India. Its first governor was Sir.Osborne A.Smith (April 1,1935 to June 30,1937). Its first Indian governor was Sir Chintaman D.Deshmukh (August 11,1943 to June 30,1949)

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PREAMBLE The preamble of the Reserve Bank of India describes the basic functions of reserve bank as: “…To regulate the issue of bank notes and keeping of reserves with a view to security monetary stability in India and generally to operate the currency and credit system of country to its advantage “.


ORGANIZATION OF RBI Central board Local board


CENTRAL BOARD (1 OF 2) Reserve bank affairs are governed by central board of directors.The board is appointed by government of India as per the reserve bank of India act. Appointed/Nominated for the period of 4 years. Constitution: - Official directors Full time: Governor and not more then 4 deputy governors.


CENTRAL BOARD (2 OF 2) Non official directors Nominated by government : Ten directors from various fields and one government official. Others: Four official directors one each from four local boards. Functions : General superintendence and direction of the bank’s affairs.


LOCAL BOARD (1 OF 2) One each for the four regions of the country in Mumbai,Kolkata,Chennai and New Delhi Membership: Consists of five members each Appointed by the central government for a term of 4 years.


LOCAL BOARD (2 OF 2) Functions:- To advise the central board on local matters and to represent territorial and economic interests of local cooperative and indigenous banks. To perform such other functions as delegated by central board from time to time.

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FORMULATE MONETARY POLICY Objective : Maintain price stability and ensuring adequate flow of credit in the economy. What RBI does: It formulate implement and monitor the monetory policy. Instruments : Qualitative and Quantitative

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Monetary authority Regulator and supervisor of financial system. Manager of foreign exchange Issuer of currency Developmental role FUNCTIONS OF RBI

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QUANTITATIVE MEASURES Bank Rate: also called discount rate .It also include repo rate. OPEN MARKET OPERATION: Buying and selling of government securities. VARIABLE RESERVE RATIO:It includes CRR and SLR.


QUALITATIVE MEASURES Margin requirement Moral suasion Rationing of credit

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REGULATE AND SUPERVISE THE FINANCIAL SYSTEMS OBJECTIVE: To maintain public confindence in the system,protect depositors interest and provide cost effective banking service to the public. WHAT RBI DOES? Prescribes board parameters of banking operations within which the country’s banking and finacial system functions. The RBI performs this function under the guidance of the board for financial supervision (BFS). Lender of last resort.

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MANAGER OF FOREIGN EXCHANGE OBJECTIVE: To facilitate external trade and payment and promote orderly development and maintenance of foreign exchange market in India. WHAT RBI DOES? It acts as a custodian and manages the foreign exchange management act ,1999. RBI buys and sells foreign currency to maintain the exchange rate of Indian rupee v/s foreign currencies like US dollars,euro,Pound sterling and Japanese Yen. Dollar deposits - LIBOR

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ISSUE OF CURRENCY OBJECTIVE:To ensure adequate quantity of supply of currency notes and coins of good quality. WHAT RBI DOES? Issue new currency and destroy currency and coins not fit for circulation. It has to keep in the form of gold and foreign securities as per statutory rule against notes and coins issued.

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OBJECTIVE: To develop the quality of banking system in India. WHAT RBI DOES? Performs a wide range of promotional functions to support national objectives. To establish financial institutes of national importance for eg:- NABARD,IDBI etc. DEVELOPMENTAL ROLE

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SUBSIDIARIES FULLY OWNED: National housing bank (NHB),deposit insurance and credit gurantee corporation of India (DICGC),Bharatiye reserve bank note mudran private ltd.(BRBNMPL) MAJOR STAKES: - National bank for agriculture and rural development (NABARD). RBI has recently divested its stake in SBI to Govt. of India. RBI had also set up some training institutions.

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RELATED FUNCTIONS (1 OF 2) Banker to the govt.- Performs all banking functions for central and state government and also act as their bankers. Banker to bank: Maintain banking accounts of all scheduled banks. RBI also regulates the opening/installation of ATM. Fresh currency notes for ATM’s are supplied by RBI. RBI regulates the opening of branches by the banks.

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RELATED FUNCTIONS (2 OF 2) RBI regulates the trade of gold currently 17 Indian banks are involved in the trade of gold. Collection and publication of data. Issues guidelines and directions for commercial banks.



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