Central Bank of India: RBI

"CENTRAL BANK OF INDIA: RBI"

Introduction:

The Reserve Bank of India (RBI) is India’s Central Banking Institution that which controls the Monetary Policy of the Indian Rupee. RBI established on 1^st April, 1935 under RBI Act 1934(recommendations of John Hilton Young Commission 1926-called Royal Commission on

Indian Currency and Finance). The Central Office of the Reserve Bank was initially established in Calcutta but was permanently moved to Mumbai in 1937. RBI nationalized on 1^st January, 1949.

Initially RBI was constituted as a Private Share Holders’ bank which was taken over by the Central Govt. under Reserve Bank Act 1948 with fully paid-up capital of Rs. 5Crore. RBI is the sole authority in India to issue Bank notes in India. It is a statutory body. The Reserve Bank of India has 19 regional offices, most of them in state capitals and 9 Sub-offices.

Objectives:

The main objectives of Reserve Bank of India are-

• Meeting the currency requirement of the public;
• Foreign exchange reserve management;
• Operating Monetary Policy with the aim of maintaining economic and financial stability and ensuring adequate;
• Promoting of an efficient financial system;
• The conduct of Banking and Financial operations of the Government;

Functioning of RBI:

The main functions of the bank are to regulate the issuing of notes and keeping the reserves with a view to securing monetary stability in India. It generally to operate the currency and credit system of the country to its advantage. Another functions are-

• Monetary Authority
• Regulate and Supervisor of the Financial System
• Lender of Last Resort
• Central Clearance and Accounts Settlement
• Issuer of Currency
• Custodian of Foreign Exchange Reserves
• Provision of Industrial Credit
• Banker of Government
• Controller of Credit

 Banking Structure:

Structure of RBI:

RBI is wholly owned by the Government in India. Central Board of directors oversees the Reserve Banks’ business. The board is appointed by the Government of India in keeping with the Reserve Bank of India Act, 1934.

CENTRAL BOARD: The Central Board has primary authority for the oversight of the Reserve Bank. It surrogates specific functions through its committees and sub-committees.

It includes the Governor, Deputy Governors and a few Directors (of relevant local boards).

Official Directors: Full Time- One Governor and Four Deputy Governors.

Governor of RBI-

• Dr. Urjit R. Patel

Deputy Governors-

• Dr. Viral V. Acharya
• Shri N. S. Vishwanathan
• Shri S. S. Mundra
• Shri R. Gandhi

Non- Official Directors:

Nominated by Government- Ten Directors from various fields and Two Government Official (generally from Ministry of Finance)

Others- Four Directors, one each from local boards. One each for the four regions of the country in Mumbai, Kolkata, Chennai and New Delhi.

Banking Regulation Act 1949:

The Banking Regulation Act, enacted in 1949, has been a milestone in the history of banking in India. Initially, the law was applicable only to banking companies. The Act is not applicable to Primary Agriculture Credit Societies, Non-agricultural Primary Credit Societies and Co-operative Land Mortgage Banks.

Total No. of Banks in India:

• Total Public Sector Banks (PSBs) – 22 (21 nationalized and State Bank of India)
• Total Private Sector Banks – 22
• Regional Rural Banks (RRBs) – 56
• Foreign Banks – 44
• State Co-operative Banks – 40
• Urban Co-operative Banks – 60

Banking System in India:

A bank is a financial institution that accepts deposits of money from the customers and provides banking and other financial services to their customers. A bank is generally understood as an institution which provides Fundamental Banking Services.

Functions of the Banks:

• To avoid focus of financial powers in the hands of few individuals and institutions;
• To provide the security to the savings of the customers;
• To set norms and conditions to all type of customers;
• To control the supply of money and credit

 Departments of RBI:

• Department OF Banking Operations and Develop
• Department of Currency Management
• Foreign Exchange Department
• Inspection Department
• Department of Rural Planning and Commission