RESERVE BANK OF INDIA

A.FIROZ MBA

INTRODUCTION It is the central bank of India Established in 1 April 1935 under the reserve bank of India act It head quarters is in Mumbai Its present governor is Dr. d.subbarao It was originally constituted as a shareholders bank with a capital of Rs.5 crores. The entire share capital was contributed private shareholders with the exception of the nominal value of Rs 2.2 lakh subscribed by the central bank After independence, the reserve bank of India was nationalized.

Management The management of RBI is vested with the central board of directors comprising 20 members. The board consist of the following members; One governor and four deputy governor appointed by the central government Four directors nominated by the central government one from each of the local board Ten directors nominated by the central government One government official nominated by the central government

Functions of the reserve bank

Note

issue Banker to government Custodian of foreign exchange reserve bankers bank Bank of settlement and clearance Information and research functions Lender of last resort Controller of credit

R B I has the monopoly power to issue currency notes of all denominations except one rupee notes and coins. One rupee notes notes and coins are issued by government of India.

The reserve bank acts as a banker to the central and state governments. The term and conditions on which the reserve bank acts as a banker to the governments are set out in separate agreements entered into by the reserve bank with the central and state governments.

In India R B I is acting as custodian of foreign exchange reserve. The reserve bank of India has responsibility of maintain the external value of the rupee. For this purpose, the bank holds most of the nation's foreign exchange reserve

RBI is acting as banker to commercial banks and other financial institutions working in India. The reserve bank of India has the responsibility for developing an adequate and sound banking system for catering to the needs of trade, commerce and agriculture. all commercial banks in India are required to open an account with RBI. Every bank wishing to commence banking business in India most obtain a license from the reserve bank in terms of section22 of the banking regulations act.

As the reserve bank keeps the cash balance of all commercial banks it is easy for the bank to act as settlement bank or clearing house for other banks.

The reserve bank undertakes collection and dissemination of information and conducts research in this field. The bank issues several periodical publications, which attempt to explain and assess the significance of economic developments in the country

As a lender of the last resort, RBI provides financial accommodation to the commercial banks in times of financial crisis.

Control of credit is one of the most important functions of RBI. RBI performs this task with twin objectives of checking inflation and providing sufficient credit for the economic development of the country following are the various weapons of credit control used by RBI o Bank rate policy o Variable cash reserve ratio o Variation of statutory liquidity ratio o Open market operation