rbi mfs

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Presented by: Mahesh vala


Introduction History of RBI Reasons for Established RBI Objectives of RBI Key roles of RBI Importance of RBI Bank rate, repo rate, reverse repo rate Agenda


The Introduction of the Reserve Bank of India describe the basic functions of the Reserve Bank as “…to regulate the issue of Bank Notes and keeping of reserve with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage” INTRODUCTION


RBI is also known as Central bank of India. It was established on April 1, 1935. The RBI is initially established in Kolkata. It is permanently moved to Mumbai in 1937. The RBI was nationalized in 1949. HISTORY OF RBI


To manage the Monetary and credit system of the country To stabilize internal and external value of rupee For balanced and systematic development of banking in the country For the development of organized money market in the country For proper arrangement of agriculture finance For proper arrangement of industrial finance For proper management of public debt To establish monetary relations with other countries of the world and international financial institutions For centralization of cash reserves of commercial banks To maintain balance between demand and supply of currency REASONS FOR ESTABLISHMENT OF RBI


Maintain price stability and ensuring adequate flow of credit to productive sector. Maintain public confidence in the system. Provide cost effective banking services to the public. Maintain foreign exchange market in India. To regulatator and supervisor of financial system. Maintain Banking Accounts of all scheduled banks. OBJECTIVES OF RBI


Note issuing authority Government banker Bankers bank Supervising authority Exchange control authority Regulator of money and credit KEY ROLE OF RBI


Note issuing Authority Issues and exchanges or destroys currency and coins not fit for circulation . Government bankers The RBI is the banker to the central and the state governments. It provides in this capacity, to the government, all banking services such as acceptance of deposits, withdrawal of funds by cheques, making payments as well as receiving payments on their behalf, transfer of funds, management of public debt and so on. CONT…


Bankers’ Bank As a bankers bank, the RBI has a very special relationship with banks and the major part of its business is with these banks. it controls the volume of their reserves SLR and CRR and determines their deposits credit ability. Supervising Authority As a regulator and supervisor,RBI provides broad parameters within which the banking system functions. it regulates and supervises the banking system in India according to the provisions of the RBI act and the banking regulation act. CONT..


Exchange Control Authority As the control authority, the function of the RBI is to develop and provide for orderly development and maintenance of foreign exchange market within the frame work of the country’s foreign exchange mgt act. The RBI is to custodian of the country’s foreign exchange reserved. Regulator of money and credit Formulates, implements and monitors the monetary policy. maintaining price stability and ensuring adequate flow of credit to productive sectors. CONT…


The OMOs refer to the sale and purchase of securities of the central and state governments and treasury-bills. The objective of OMOs are: To control the amount of and changes in credit and money supply through controlling the reserve base banks to make the banks rate policy more effective. To maintain stability in the government securities. to smoothen the seasonal flow of funds in the bank credit market. OPEN MARKET OPERETIONS(OMOs)


The bank rate is standard rate at which the RBI buys/Rediscounts bills of exchange/other eligible commercial paper. it is also the rate that the RBI charges on advances on specified collaterals to banks. This is typically done on a quarterly basis to control inflation and stabilize the country’s exchange rates. BANK RATE


The CRR is the cash which banks have to maintain with the RBI.As a percentage of their demand and time liabilities. The aim is to ensure the safety and liquidity of banks deposits. Cash reserve ratio is basically to secure solvency of banks and to use up the excessive money from the bank. CASH RESERVE RATIO(CRR)


To restrict the expansion of bank credit. To expand bank’s investment in government securities. To ensure solvency of banks. SLR rate is determine and maintain by the RBI in order to control expansion of the bank credit. STATUTORY LIQUIDITY RATIO (SLR)


Wherever the banks have any shortage of funds that can borrow it from the central bank. Repo rate is the rate on which our banks borrow currency from central bank. A reduction in the repo rate will help to gate money at a cheaper ate. REPO RATE


It s the rate at which banks park surplus fund with reserve bank. It is mostly done , where there is surplus liquidity in the market b the central bank. REVERSE REPO RATE


Book Financial services (M. Y khan) 5th edition. Website www.rbi.org.in BIBLIOGRAPHY

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