RESERVE BANK OF INDIA
- RBI is India's Central banking institution which controls the monetary policy of the Indian rupee
- It was established on 1st April 1935
- In 1926 royal commission on Indian currency and Finance also known as the Hilton young commission recommended the creation of RBI
- Reserve Bank of India Act was enacted in 1934
- RBI was established with a capital of 5 crore
- RBI was nationalised on 1st January 1949
- Headquarters located at Mumbai (Maharashtra)
- Note: The headquarters of RBI was initially established in Calcutta (West Bengal) was permanently shifted to Mumbai (Maharashtra) in 1937
- RBI logo consist of tiger and palm tree
Note: The original choice for the seal of RBI was the East India company double mohur, with the sketch of the lion and palm tree however it was decided to replace the lion with the tiger the national animal of India
RBI also acted as Burma's Central Bank until 1947 and served as Central banks for Pakistan until 1948 when the State Bank of Pakistan commenced operations
LIST OF MAJOR CENTRAL BANKS
FACT SHEET
RESERVE BANK OF INDIA (RBI) TRAINING CENTRES
RESEARCH INSTITUTES
SUBSIDIARIES OF RESERVE BANK OF INDIA (RBI)
National Housing Bank (NHB)
- National housing bank is wholly world subsidiary of the RBI to act as an Apex level institution for housing
- It was established with the objective of promoting inclusive expansion with stability in Housing Finance market, to make housing credit more affordable
- RESIDEX is a reality index for the country. It tracks residential property prices across 26 Indian cities
Deposit insurance credit guarantee corporation (DICGC)
- Deposit insurance and credit guarantee corporation is a wholly owned subsidiary of Reserve Bank of India
- It was established under deposit insurance and credit guarantee corporation Act 1961 for the purpose of providing insurance cover for bank deposits and guaranteeing of credit facilities
- To measure functions of DICGC are:
- Deposit insurance function i.e., to give insurance protection to small depositors in banks
- Credit guarantee function i.e., to provide guarantee support to credit facilities extended by eligible credit Institutions to certain categories of small borrows, including farmers, village artisans etc
- Banks covered by deposit Insurance scheme: all commercial banks, including the branches of foreign banks functioning in India, local area banks, regional rural banks and cooperative banks
- DICGC insures all bank deposits, such as saving, fixed, current, recurring deposits for up to the limit of 1,00,000 of each deposit in a bank it insurance principle and interest up to maximum amount of 1lakh
- Insurance coverage 100000 with effect from first may 1993 onwards
- The rate of insurance premium was fixed at 0.05% per annum
- Total number of banks insured 2129 (as on 15th March 2016)
Bhartiya Reserve Bank Note mudran Private limited (BRBNMPL)
- BRBNMPL is the one of the wholly owned subsidiaries of Reserve Bank of India which prints currency notes
- It was established with a view to augmenting the production of currency notes in India to enable the RBI to bridge the gap between the supply and demand for Bank notes in the country
National bank for agriculture and Rural Development (NABARD)
- Nabard is the apex institution in the country which looks after the development of agriculture industry, cottage industry, small industry and village industry and other rural industries
- It replaced the agriculture credit department (ACD), rural planning and credit cell (RPCC) & agriculture refinance and Development corporation (ARDC)
- As on 31st March 2015, shareholding of Government of India stood at 99.60% and Reserve Bank of India holds 0.40%
- NABARD refinances the financial institution which finances the rural sector. The Institutions which help the rural economy
- It is regulates the cooperative banks and the RRB's
- NABARD set up the rural infrastructure development fund (RIDF). The purpose of RIDF is to promote innovation in rural and agricultural sector through variable means
- Under the RIDF scheme 51000 crore approx. have been sanctioned for irrigation, rural roads and bridges, health and education, soil conservation, water schemes etc
- Bankers institute of rural development (BIRD) headquarters located at Lucknow (Uttar Pradesh)
CENTRAL BOARD OF DIRECTORS (RESERVE BANK OF INDIA)
The Central board has primary authority for the oversight of the RBI
MAIN ACTIVITIES OF (RESERVE BANK OF INDIA) RBI
- Monetary authority
- Issuer of currency
- Banker and debt manager to government
- Banker to banks
- Regulator of the banking system
- Manager of Foreign exchange reserves
- Maintaining financial stability
- Supervisor of the payment and settlement system
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| Role of RBI |
1.MONETARY AUTHORITY
- Monetary policy refers to the use of instruments under the control of the central bank to regulate the availability cost and use of money and credit
- The main objectives of monetary policy in India are:
- Maintaining price stability
- Ensuring adequate flow of credit to the productive sectors of the economy to support economic growth
- Financial stability
- The Reserve Bank of India annual policy statement (credit policy), announced in April, and are followed by three quarterly reviews in July, October and January
- A detailed background report-review of macroeconomic and monetary developments-is released the day before each of these policy reviews
- RBI Central board has to conduct,
- 6 meetings at a minimum in a year
- One meeting at minimum in a quarter
2.ISSUER OF CURRENCY
- The Reserve Bank is the Nation's sole note issuing authority
- As per section 22 of Reserve Bank of India Act 1934 RBI has the 16 authority to issue currency notes of all denominations except 1rupee notes
- 1 rupee note or issued by the ministry of Finance of Government of India
- Rs 1 currency notes bears the signature of secretary ministry of Finance while other currencies nodes beer the signature of governor, RBI
- The Reserve Bank has the authority to issue notes up to value of 10000
- The Government of India has the sole right to mint coins. The responsibility for coinage vests with the Government of India in terms of the coinage act 1906. RBI is the agent of the government for distribution, issue and handling of coins
- Coins can be issued up to the denomination of 1000 as per the coinage Act 1906.
- Minimum reserve system: since 1957, note issuing has been based on a minimum reserve system. Presently minimum Reserve of 200 crore is to be maintained for issuing notes up to any limit. This comprises of gold worth 115 crore at least and remaining in Foreign exchange reserves
- RBI is required to maintain a reserve fund for Note issuing. This is to maintain confidence of the people in the country's currency
Currency Printing Press
Coin Mints
Currency Chest
- To facilitate the distribution of banknotes and rupee coins, the Reserve Bank has authorised select branches of scheduled banks to establish currencies chest. The currency chest branches are expected to distribute Bank notes and rupee coins to other Bank branches in their area of operation
Soiled Note
- Soiled note means a note which, has become dirty due to usage and also includes a two pieces presented belong to the same note and form the entire note
Mutilated Bank Note:
- It is a bank note of which a person is missing or which is composed of more than two pieces
Plane Note Policy
- To help RBI and banking system, the member of public are requested to ensure the following:
- Not to staple the Bank notes
- Not to bright / put rubber stamp or any other mark on the Bank notes
- Not to use Bank notes for making garlands / toys, decorating pandals and places of worship or for showering on personality in social events etc
- 1000 and 10000 Bank notes, which were then in circulation were demonetized in January 1946. The higher denomination Bank notes in 1000,5000 and 10000 were reintroduced in the year 1954, and these Banknotes 1000,5000 and 10000 were again demonetized in January 1978
3.BANKER AND DEBT MANAGER TO GOVERNMENT
- Managing the governments banking transactions is a key RBI role
- RBI undertaking banking transactions for the central and state governments to facilitate receipts and payments and maintaining their accounts
- Developing the market for government securities to enable the government to raise debt at a reasonable cost
Ways and means advance:
- At the end of each day the RBI electronics system automatically consolidates all of the government's transactions to determine the net final position.
- If the balance in the governments account shows a negative position, it extends a short-term, interest-bearing advance called a ways and means advance (WMA)
4.BANKER TO BANKS
- The Reserve Bank provides products and services for the Nations banks similar to what banks offer their own customers
- Lander of The Last resort: the Reserve Bank provides liquidity to banks, when they unable to raise short-term liquid resources from the interbank-market
5.REGULATOR OF BANKING SYSTEM
- The Reserve Bank has a critical role to play in ensuring the safety and soundness of the banking system and in maintaining financial stability and public confidence in this system
- Board for financial supervision(BFS): for dedicated and integrated supervision overall credit institutions i.e., banks, development Financial Institutions and non banking financial companies, the board for financial supervision(BFS) was set up in November 1994 under the aegis of The Reserve Bank of India
- As the Nation's financial regulator, the Reserve Bank handles a range of activities, including:
- Licensing
- Prescribing capital requirements
- Monitoring governance
- Setting prudential regulations
- Prescribing landing to certain priority sectors of the economy
- Initiating new regulation etc
6.MANAGER OF FOREIGN EXCHANGE RESERVES
- The Reserve Bank place a key roll in the regulation and development of foreign exchange market
- RBI NCR smooth conduct and otherly conditions in the domestic foreign exchange market. It manages the foreign currency assets and gold reserves of the country
- The Reserve Bank is responsible for administration of foreign exchange management act 1999 (FEMA 1999 replaced FERA 1973) and regulates the market by issuing licence to bank and other selected Institutions to act as authorised dealers in foreign exchange
7.MAINTAINING FINANCIAL STABILITY
- In 2009 the Reserve Bank of India set up a dedicated financial stability unit mainly to put in place a system of continuous monitoring of the macro financial system
- Following the establishment of the financial stability unit the Reserve Bank started publishing a periodic financial stability report (FSR). FSRs Arnav being published on a half yearly basis in june and December every year
8.REGULATOR AND SUPERVISOR OF PAYMENT AND SETTLEMENT SYSTEMS
- In this role RBI focuses on the development and functioning of safe, secure and efficient payment and settlement mechanisms
- The Reserve banks network of secure systems handles various types of payment and settlement activities. Most operate on the security platform of the Indian financial network (INFINET), using digital signatures for further security of transactions
- The payment and settlement systems act of 2007 gives the Reserve Bank oversight authority, including regulation and supervision, for the payment and settlement systems in the country
DEVELOPMENTAL ROLE
- Over the years, the Reserve Bank has added new Institutions as the economy has evolved. Some of the Institutions established by the RBI include:
CUSTOMER SERVICES
BANKING COURSE AND STANDARDS BOARD OF INDIA (BCSBI)
- The Reserve Bank Of India established BCSBI in 2006 to encourage transparency in lending and fare pricing. It will give customers more confidence in the system and encourage more uses of formal banking
- BCSBI is not a compensation mechanism and it is looks into a individual complaint only to the extent it points to any systematic compliance failure
- It is an independent and autonomous body registered as a separate society under the societies registration Act 1860
- S.S. Tarapore committee recommended setting up of bcsbi for benefit of customers so that they can get better Financial services
- The main function of BCSBI is to ensure adherence to the "code of bank's commitment to customers". The code is voluntary and sets minimum standards of Banking practices for banks to follow when they are dealing with individual customers in their day to day operations
BANKING OMBUDSMAN (BO)
- Banking ombudsman is an independent authority appointed by RBI to resolves the complaints of the customers in regard to services provided by the banks
- The banking ombudsman scheme was first introduced in India in 1995. The current scheme became operative from 1st January 2006
- As on date 18 banking ombudsman have been appointed with their offices located mostly in state capitals
Banking ombudsman scheme 2006:
- It enables an expeditious and in expensive forum to bank customers for resolution of complaints relating to certain services rendered by banks
- All scheduled commercial banks RRB and scheduled primary cooperative banks are covered under the scheme
- One can file a complaint before the banking ombudsman if the reply is not received from the bank within a period of one month after the bank concerned has received one's representations, or the bank rejects the complaint or if the complaint is not satisfied with the reply given by the bank
- The banking ombudsman does not changes any fee for feeling and resolving customers complaints
- A banking ombudsman can reject a complaint at any stage on following grounds
- There is no Las are damage are inconvenience caused to the complaint in the opinion of the banking ombudsman
- The compensation Sought from the banking ombudsman is beyond 10 lakh
- The complaint is not pursued by the complaint with reasonable deligans
- 10 lakh is the maximum amount of compensation that a banking ombudsman can allow for a case referred to it
- The banking ombudsman may award compensation not exceeding 1 lakh to the complaint only in the case of complaints relating to credit card operations for mental agony and harassment
- If a person is not satisfied with the decision passed by the banking ombudsman he/she can approach the appellate authority against the banking ombudsman's decision. The appellate authority is vested with deputy governor of Reserve Bank of India
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