IBPS - BANKING/INSURANCE EXAMINATIONS RAPID READING EXERCISE BULLET POINTS RESERVE BANK OF INDIA 01.

. Reserve Bank of India is the central bank of the country 02. RBI was established on 1.4.1935 on the recommendations of Hilton Young commission 03. RBI was nationalized during the year 1949 04. The main functions of the bank are to To regulate the issuing of bank notes Keep the reserves with a view to securing monetary stability in the country To operate the currency and credit system of the country to its advantage 05. The Royal Commission on Indian currency and finance recommended creation of a central bank of India during 1926 06. The Reserve Bank commenced operations as Indias central bank on April 1 as a private shareholders bank with a paid up capital of rupees five crore 07. The Reserve Bank stopped acting as banker to the Government of Burma 08. The Reserve Bank stopped rendering central banking services to Pakistan 09. The Government of India nationalized the Reserve Bank under the Reserve Bank (transfer of public ownership) act 1948 10. RBI is managed by central board of directors 11. The board consists of 20 members 12. Besides Governor and four deputy governors, four directors are nominated, each by the four local boards 13. Besides ten directors, one government officer are nominated by the government of India 14. The Reserve Bank of India was established on 1.4.1935 in accordance with the provisions of the RBI act 1934 15. Initially the central office was located at Kolkatta 16. The central office of RBI was permanently shifted to Mumbai during 1937 17. The governor is available in the central office where policies were formulated 18. Since 1949, RBI is owned by Government of India 19. The functions of RBI can be classified into Traditional functions Developmental functions Regulatory functions 20. The traditional functions can be further classified into central banking functions and general banking functions 21. The central banking functions are classified into Issue of paper currency Regulation of credit Banker of banks and lender of the last resort Banker of the government Foreign exchange management Miscellaneous functions export assistance, clearing house functions, change of currency, transfer of currency, publication of statistics and other information, conducting training in banking ISSUE OF PAPER CURRENCY 22.RBI is the nations sole issuing authority 23.RBI issues notes of the denominations of Rs. 2 to Rs. 1000 24.The note issuing department is known as issue department 25.Since 1956, currency notes issuing is based on Minimum Reserve System 26.At present a minimum reserve of Rs. 200 crore is to be maintained for issuing notes upto to any time

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27.The minimum reserve consists of gold worth Rs 115 crore and foreign ecurities worth Rs. 85 crores CLEAN NOTE POLICY 28. Education campaign to be conducted on preferred way to handle notes 29. No stapling, writing, excessive folding to be done 30. Timely removal of soiled notes 31. Use of currency verification, processing system and sorting machines 32. Exchange facility for torn, mutilated or defective notes at currency chests of commercial banks and in RBI issue offices 33. Coins in circulation in our country as at present are: 25 paise, 50 paise, Rs 1, Rs.2, Rs.5 and Rs.10 34. Currency notes in circulation Rs. 5, Rs. 10, Rs. 20, Rs. 50, Rs 100, Rs 500 and Rs. 1000 REGULATION OF CREDIT 35. RBI controls the creation of credit by the commercial banks 36. The credit control measures adopted by RBI are: changing the bank rate, open market operations, change in the reserve requirement of the commercial banks etc. 37. RBI controls the loan policy, interest policy and investment policy of the commercial banks BANKER OF BANKS AND LENDER OF THE LAST RESORT 38. RBI acts as banker for all commercial banks 39. All scheduled commercial banks come under the direct control of RBI 40. All commercial as well as scheduled banks have to keep a minimum reserve with the RBI 41. Commercial banks to submit weekly reports to RBI about their transactions 42. RBI acts as The lender of the last resort It is the custodian of cash reserves of commercial banks It clears, transfers the transactions It acts as the central clearing house BANKER OF THE GOVERNMENT 43. RBI performs various banking functions such as Accepting deposits Collecting taxes Making payments on behalf of the government 44. RBI performs as a representative of the government even at the international level 45. RBI maintains government accounts and provides financial advice to the government 46. RBI manages government public debts and maintains foreign exchange reserves on behalf of the government 47. RBI provides overdraft facility to the government in the case of financial crunch 48. Public accounts departments manage the day to day aspects of governments banking operations 49. RBI appoints commercial banks as its agents and uses their branches for greater access to the governments customers 50. Public debt offices provide depository services for government securities for institutions and service government loans 51. The central accounts section at Nagpur consolidates the governments banking transactions FOREIGN EXCHANGE MANAGEMENT 52. It is an essential function of Reserve Bank of India. 53. RBI regulates exchange rate of rupee in terms of foreign currencies 54. It tries to maintain stability of exchange rate 55. In order to maintain the exchange rate stability , it has to bring demand and supply of the foreign currency close to each other 56. RBI deals with the currencies of those countries only which are members of International Monetary Fund MISCELLANEOUS FUNCTIONS

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57.RBI performs the following miscellaneous functions export assistance, clearing house functions, change of currency, transfer of currency, publication of statistics and other information and training in banking 58.Export loans are given by Reserve Bank of India indirectly by refinancing the loans given by Export and Import Bank and other banks 59.RBI functions also as clearing house and inter banking obligations are conveniently settled through this house 60.RBI publishes data on various parameters, such as money, credit, finance, agricultural and industrial output and reports of these data are regularly published in their website 61.The various training colleges controlled and monitored by RBI are: - Bankers Training College, College of Agricultural Banking, Pune; Reserve Bank Staff College, Chennai; National Institute of Bank Management; Zonal training centres at various places 62.The general banking functions of RBI consist of: Accepting deposits, dealing in bills, lending of money, dealing in agricultural bills, dealing in foreign securities 63. RBI accepts deposits of the Central government, state governments, Port Trust and private individuals without paying any interest 64. Reserve Bank buys, sells and rediscounts the bills, promissory notes and hundies and these bills should not be of the duration exceeding 90 days and should be payable within the country 65. As a central bank, RBI gives loans to the central and state governments and these loans are of the duration of not more than 90 days and the loans are given against securities, credit notes of the banks and gold or silver 66. RBI also buys, sells and discounts agricultural bills and these bills should be payable in the country and should not be of the duration exceeding fifteen months 67. RBI deals in all such foreign securities which are encashable within ten years from the date of purchase 68. RBI also can borrow loan on the security of assets from other scheduled banks and the duration of such loans should not be more than 30 days and should also not exceed the total capital of the bank 69. RBI also deals in the sale and purchase of gold, silver as well as the coins of these metals 70. RBI is one among the members of International Monetary Fund 71. RBI establishes business relations with the central banks of other member countries 72. RBI can open accounts with those banks and may act as their agent or handle IMF dealings DEVELOPMENT FUNCTIONS 73. The development functions of RBI include the following: Development of agriculture, promotion of industrial finance, promotion of export through refinance, development of bill market and development and regulation of banking system 74. RBI inspects cooperative banks 75. Standing advisory committees on agriculture have been established to render advice on matters of agricultural credit 76. Since 1982-1983, all functions of RBI related to agricultural sector have been entrusted to National Bank for Agriculture and Rural Development called as NABARD 77. Towards promotion of industrial finance, RBI has set up the following institutions viz; Industrial Credit and Investment Corporation Limited presently a commercial bank called as ICICI bank managed by private entrepreneurs Industrial Development Bank of India presently a commercial bank called as IDBI a public sector bank Small Industries Development Bank of India Export and Import Bank of India 78. RBI always tries to encourage the facilities for providing finance for foreign trade especially exports from the country 79. The Export- Import Bank of India (EXIM Bank India) and the EXPORT credit guarantee corporation of India called as ECGC are supported by refinancing their lending for export purposes 80. RBI has made concerted efforts for the development of bill market

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REGULATORY FUNCTIONS 81. The regulatory functions of RBI consist of quantitative credit control and qualitative credit control 82. For controlling the flow of quantum of credit, RBI adopts all those measures that are generally adopted by the central banks in different countries 83. The measures adopted by RBI in regard to qualitative credit control are: Bank rate, differential rates of interest, open market operations, cash reserve ratio, statutory liquidity ratio, direct action, credit authorization scheme and moral persuasion 84. The qualitative or selective credit control of RBI consists of the following: Change in margin requirements on loans Maximum limit of the loans Rationing of credit 85. Bank rate is the rate of interest that the RBI charges from other scheduled banks on the loans given to them 86. Differential rates of interest scheme was commenced by RBI from October, 1960 87. Through open market operations, RBI controls the flow of credit through the sale and purchase of government securities in the open market 88. Cash reserve ratio is the amount of funds that the banks have to keep with Reserve Bank of India 89. According to Indian Banking act 1949, a bank is legally bound to keep 20 percent of its deposits in the form of liquid assets. 90. According to banking regulation act, 1949, RBI can stop any commercial bank from any type of transactions 91. In order to regulate during the year, 1965, Credit authorization scheme was adopted and it aims at regularizing of the credit given by the banks 92. RBI can also exercise moral influence on member banks with a view to pursuing its monetary policies 93. RBI also counsels the banks to invest more and more in government securities in order to increase its liquidity 94. RBI directs the member banks to change the margin requirements on loans from time to time depending upon the prevailing economic conditions 95. With a view to checking speculation RBI fixed maximum limits of loans by the commercial banks 96. Rationing of credit is yet another technique of selective member banks as well as their limits for the payment of bills 97. Repo is short term repurchase agreement and under this a dealer or other holder of government securities usually treasury bills sells the securities to the lender and agrees to repurchase them at an agreed future date at an agreed price and they are short term from overnight to 30 days 98. In the case of reverse repo, a dealer buys government securities from an investor and then sells them back at a later date at a higher price 99. Term repo is exactly the same as repo except the term of the loan is greater than 30 days 100. The total number of zonal offices at RBI are 22

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