THE FUNCTIONS
OF
RESERVE BANK OF INDIA
Prepared By
Renny M P
§
Promotional &
Traditional
Devolopmental
Functions Functions
Other Prohibitory
Functions Functions
V §
Issue of Training
Currency Facilities
Collection &
Banker to Publication of
Government Data &
Reports
Exchange
Bankerǯs Management
Control of
Bank & Control Credit
¢ Acts as the currency authority.
¢ Monopoly of issuing all denominations except one rupee
note & coins
¢ They are printed and issued by DzIssue Departmentdz.
¢ Rs.1,2,5 and small coins (issued by Ministry of Finance)
are also distributed by this dept.
¢ Currency is distributed to banks & public through
15 offices and 2 branches in touch with SBI
7 Associates
some public sector banks
State Govt. treasuries & sub-treasuries.
0
¢ Acts as banker to the Central & State Govt.s
It renders following services:
Maintains and operates the cash balances of the
Central & State govt.s in the current account deposit.
Receives and makes payments on behalf of the Central
& State govt.s
Carries out exchange, remittance and other banking
operations on behalf of them.
Buys and sells govt. securities in the market.
Manages the public debt by issuing govt. loans and
paying interest and principal.
Sells treasury bills through tender on behalf of the govt.
Advices the govt.s on all banking and financial matters
(financing 5 Year plans and resource mobilisation, balance
of payment, etc.
Acts as the agent of the Central & State govt.s in their
dealings with IMF, World Bank, IFC, Exim Bank, etc.
ð
¢ Acts as banker to scheduled commercial banks
in India.
1) Keeps a part of the cash reserves of these banks and
provides them with remittance facilities.
2) It supervises, regulates and controls the working of
banks in India(issuing licence for opening & branch
expansion, inspection of books & accounts, etc.
3) Acts as clearing house for banks.
4) Provides refinance facilities to commercial banks for
export credit.
D
Manage Foreign
Exchange
Exchange Reserves
Management &
Control Control
external value
of rupee
O
¢ Under Foreign Exchange Regulation Act, 1973, it
controls receipts & payments of foreign
currencies.
[ Foreign currencies coming to India are sold and
exchangedǥ
[ Foreign currencies are provided to importers &
persons travelling abroad.
¢ Changes the exchange rate of the rupee in
relation to other currencies( such as dollar, mark,
yen. Sterling, etc.)
¢ Introduced full convertibility of rupee to entire
current account transactions.
G
¢ Controls money supply and credit to ensure price
stability & meet varying economic conditions of
the country.
¢ Estimates credit needs and supplies to different
sectors.
variations in interest rates
open market operations
changes in CRR, SLR
! "#
Department of Economic Analysis &
policy
Division of Reports, Reviews &
Publications
Collects data on economic matters
and publishes them in various
publications.
Important Publications:
i. Reserve Bank of India Bulletin ( monthly)
ii. Annual report on currency & finance
iii. Report on Trend & Progress on Banking in
India.
iv. Other occassional papers.
v. Conducts surveys and publishes reports on
them.
º §
¢ Setting up training colleges & centres to provide
training to banking personnel.
3.College of gricultural
1.Bankerǯs Training 2.Reserve Bank Staff
Banking at une :
College at Madras : for
College at Mumbai : Training programmes in
bank officers on area of
Training to Senior field of agricultural
investment, fund mangt.,
officers finance, rural banking,
customer service, etc.
etc.
5.Indira Gandhi Institute
4.Zonal Training Centres of Devolopment Research 6.Training in Computer
in Mumbai, Culcutta, : conducts research on Technology : for efficient
Chennai, New Delhi : for projects and arranges and quick use of
3rd and 4th class staffs workshop, conferences 7 technologies.
seminars.
§
Promotional &
Traditional
Devolopmental
Functions Functions
Other Prohibitory
Functions Functions
! #
§
Promotional &
Devolopmental
Functions
Ensuring that
Creating the finance
Machinery flows in socially
needed for desired
financing dept. directions
1. Agricultural Finance .
¢ Provides advice and financial help for dept. of agriculture and
allied rural activities.
¢ Agricultural Credit Dept.
¢ NABARD ( since 1982 )
2. Industrial Finance.
¢ Advice and help bank in providing financial help to
industry
¢ setting up SFC, IFCI, IDBI, ICICI,etc.
¢ Industrial Credit Dept.
3. Export Credit
¢ RBI provides concessional credit, refinance facilities
and guarantee to commercial bank for exporters.
¢ Set up Exim Bank to finance export trade.
4. Credit to Priority sector & Weaker sections
¢ Differential rate of interest scheme Ȃ provides concessional
finance to them @ 4% interest rate .
5. Bill Market Scheme
¢ Provide rediscounting facilities to commercial banks from the
Bank and other financial institutions.
6.Devolopment & Regulation of Banking system
¢ Devpt. & promotion of country.
¢ Establishing IDBI, IFCI, ICICI, SIDBI,etc.
¢ Judicious policy of regulation & control of banks.
§
Promotional &
Traditional
Devolopmental
Functions Functions
Other Prohibitory
Functions Functions
$
§
a. Issues demand drafts, b. Borrows money
and makes, issues and from a scheduled bank
circulates bank post- in India/central banks
bills. in other countries.
c. Make agency
agreement with central
banks in other d. Purchases and sells
countries, act as agent gold and bullion
and invest funds in their
shares.
§
Promotional &
Traditional
Devolopmental
Functions Functions
Other Prohibitory
Functions Functions
§
¢ Not for competing with other banks
¢ For keeping its assets in liquid form to meet any
eventuality.
Cannot buy its own or
other banking
companyǯs shares
Cannot
participate in Cannot give Cannot purchase
business/ interest for immovable property
trade/industry its deposits except for its offices
Cannot give loans
against immovable
property
REFERENCE BOOKS :
¢ M L JHNGAN, DzMonetary Economicsdz, 5th Edition
¢ DzEconomics for Managersdz Ȃ Prescribed Text book of
M.G.University
¢ DzEconomic Timesdz
¢ RBI Report on Currency and Finance,1991-92 & 1992-93.
