FUNCTIONS OF RBI(RESERVE BANK OF INDIA)

MEBE Date:
Group Members:

Parth Shah Abhishek Rathod

11MBA091 11MBA080

Viral Shah
Vaibhavi Mistri Viral Doshi

11MBA095
11MBA036 11MBA014

Reserve Bank of India

The Reserve Bank of India (RBI) was established

on April 1, 1935 as per the provision of RBI Act

1934.

At first, the Central Office of RBI was in Calcutta,

that was later shifted to Mumbai in year 1937.

Cont
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The governor at the Central is responsible for formulating the policies of RBI. RBI was nationalized in the year 1949.

The RBI is monitored by a central board of directors.

The board is appointed by the Government of India in

accordance with the RBI act.

Functions of RBI
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Issuer of currency Banker to the Government Managing Government Securities Banker to Other Banks Controller of Money Supply and Credit Exchange Manager and Controller Publisher of Monetary Data and Other Data Promotional Role of RBI

Issuer of currency
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RBI is the sole authority for the issue of currency in India.

RBI has two departments Issue department Banking department.

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The issue department is dedicated to issuing currency.

All the currency issued is the monetary liability of RBI that is backed by
assets of equal value held by this department.

The Banking department of RBI looks after the banking operations. It takes care of the currency in circulation and its withdrawal from circulation.

Issuing new currency is known as expansion of currency and withdrawal of currency is known as contraction of currency.

Banker to the Government

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RBI acts as banker, both to the central government and state governments. It manages all the banking transactions of the government involving the receipt and payment of

money.

RBI provides short-term credit to the central government. RBI also manages all new issues of government loans, servicing the government debt outstanding, and nurturing the market for governments securities.

Managing Government Securities

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Various financial institutions such as commercial banks are required by law to

invest specified minimum proportions of their total

assets/liabilities in government securities.

Banker to Other Banks

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The role of RBI as a banker to other banks is as follows:

Holds

some of the cash reserves of banks Lends funds for short period Provides centralized clearing and quick remittance facilities

Controller of Money Supply and Credit

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In a planned economy, the central bank plays an important role in controlling the paper currency system and inflationary tendency.

RBI has to regulate the claims of competing banks on

money supply and credit.

RBI also needs to meet the credit requirements of the rest of the banking system.

Exchange Manager and Controller

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RBI manages exchange control, and represents India as a member of the international Monetary Fund [IMF].

According to foreign exchange regulations, all foreign

exchange receipts, whether on account of export earnings, investment earnings, or capital receipts, whether of private

or government accounts, must be sold to RBI either directly

or through authorized dealers.

Publisher of Monetary Data and Other Data

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RBI maintains and provides all essential banking and other economic data, formulating and critically evaluating the economic policies in India.

In order to perform this function, RBI collects, collates and publishes data regularly.

Promotional Role of RBI

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Promotion of commercial banking. Promotion of cooperative banking. Promotion of industrial finance. Promotion of export finance. Promotion of credit to weaker sections. Promotion of credit guarantees. Promotion of differential rate of interest scheme. Promotion of credit to priority sections including rural & agricultural sector.

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