CONTENTS OF RBI:

REPORT OF RESERVE BANK OF

INDIA

SUBJECT: INTERNATIONAL FINANCE

PROF.ARJUN CHOUDHRI

1. Origins 2. History 3. Structure 4. Main activities of RBI 5. Currency, coin & printing 6.Technology

& Central bank 7. Currency Management 8. Payment/ settlement 9. RBI as a user of technology 10.
RBI-repo rate, CRR, SLR, RR, RRR & MSF.

RESERVE BANK OF INDIA

CONTENTS OF RBI:
RBI- ORIGINS:

Established

Headquarters :

Mumbai, Delhi & Kolkata

Governor

Raghuram Govind Rajan

Alias Name

Central Bank of India

Currency

Indian Rupee (INR)

Reserves

$ 287.37 billion( 2014)

1st April,1935

HISTORY :

Operations begin on April 1, 1935 to respond to economic troubles after the First World
War.
Since 1949, RBI has been fully owned by the government of India

Between 1969 and 1980 the Indian government nationalized 20 banks.

1991: India faces balance of payment crisis; pledges gold to shore up reserves & Rupee
devalued
It was set up on the recommendations of the HILTON YOUNG COMMISSION & was
started as share-holder bank with a paid-up capital of 5 crs
Its first governor was Sir. Osborne A. Smith( 1st April 1935 to 30th June 1937)

STRUCTURE OF RBI:

The Reserve bank is wholly owned by the Government of India. The Central Board of
Director oversees the Reserve Banks business.
Central Board of Directors
1 Governor
4 Deputy Governor, at a maximum
Non- Official Directors
4 directors- nominated by the Central Government to represent each local board.
10 directors nominated by the Central Government with expertise in various segments of
the economy.

MAIN ACTIVITIES OF RBI:

Monetary Authority
Issuer of Currency
Banker and Debt Manager to Government
Banker to Banks
Regulator of the Banking System
Manager of foreign Exchange
Regulator and Supervisor of the Payment and Settlement Systems
Developmental Role.

MONETARY AUTHORITY:

Monetary Policy Objective :

Maintaining price stability
Ensuring adequate flow of credit to the productive sectors of the economy to support
economic growth
Financial stability
Monetary Policy Tools
Direct Instruments:
- Indirect Instruments:

Cash Reserve Ratio(CRR)

(LAF)
Statutory Liquidity Ratio(SLR)
Refinance facilities

- Liquidity Adjustment Facility

- Open Market Operations(OMO)
- Market Stabilization Scheme (MSS)
- Repo/ reverse repo rate & Bank Rate

ISSUER OF CURRENCY:

The Reserve Bank is the nations sole note issuing authority.

RBIs Clean Note Policy:
*Education campaign on preferred way to handle notes: no stapling, writing,
excessive folding.
*Timely removal of soiled notes: use of currency verification and processing
systems and sorting machines
*Exchange facility for torn, mutilated or defective notes; at currency chests of
commercial banks and in Reserve Bank issue Offices
RBIs Anti- counterfeiting Measures :
*Continual upgrades of bank note security features
*Installation of note sorting machines.

NOTES & FEATURES :

The two Printing press at Nashik & Dewas are owned by Government of India
and other two in Mysore and Salboni are owned by BRBNM.Pvt.Ltd.Company.
(Bharatiya Reserve Bank Note Mudran Private Limited)
Security features of a note:
Water mark
Latent image
Identification mark
Security thread.

CAPACITY OF PRESS & MINTS:

Total annual capacity of Presses: 18 bn.

Can print up to 28 bn with two shifts.
Total minting capacity :4,700mn
RBIs annual needs:
Notes: about 12,000 mn pieces
Coins: about 5,000 mn pieces.

Banker & Debt Manager to Government:

The role as banker and debt manager to government includes several distinct functions:
Undertaking banking transactions for the Central & State government to facilitate
receipts & payments & maintaining their accounts.
Managing the governments domestic debt with the objectives of raising the required
amount of public debt in cost- effective & timely manner.
Developing the market for government securities to enable the government to raise debt
at a reasonable cost, provide benchmarks for raising resources by other entities and
facilitate transmission of monetary policy actions.

BANKER TO BANKS:

As the banker to banks, RBI focus on:

*Enabling smooth, swift and seamless clearing and settlement of inter-bank
obligations.
*Providing an efficient means of funds transfer for banks.
*Enabling banks to maintain their accounts with us for purpose of statutory
reserve requirements & maintain transaction balances.
Acting as lender of the last resort.
Tools:
*Non- interest earning current accounts
*Deposit Account Department
*Remittance facilities
*Lender of the last resort
*Loans and advances.

Regulator of the Banking system:

The Reserve Bank regulates and supervises the nations financial system
Commercial banks and all-India development financial institutions
Urban co- operative banks & Regional Rural Banks (RRB), District Central Cooperative
Banks & State Co- operative Bank
Non- Banking Financial Companies (NBFC)
RBI handles a range of activities:
*Licensing
*Prescribing capital requirements
*Monitoring governance
Prescribing lending to certain priority sectors of the economy.

Manager of foreign Exchange:

The Reserve Bank plays a key role in the regulation & development of the foreign
exchange market and assumes 3 board roles relating to foreign exchange:
Regulating transactions related to the external sector & facilitating the development of
the foreign exchange market.
Ensuring smooth conduct & orderly conditions in the domestic foreign exchange market.
Managing the foreign currency assets and gold reserves of the country.

Regulator & Supervisor of payment & settlement systems:

The Payment and settlement Systems Act of 2007(PSS Act) gives the Reserve Bank
oversight authority, including regulation and supervision, for the payment & settlement
systems in the country. In this role, we focus on the development and functioning of safe,
secure & efficient payment and settlement mechanisms.
Tools:
Retail payment systems
Large value systems
Department of payment & Settlement Systems
Department of Information Technology.

Developmental Role:

This role is perhaps, the most unheralded aspect of our activities, yet it remains among
the most critical. This includes ensuring that credit is available to the productive sectors
of the economy, establishing institutions designed to build the countrys financial
infrastructure, expanding access to affordable financial services & promoting financial
education + literacy.
Tools:
* Lead Bank Scheme
* Directed credit for lending to priority sector & weaker sections
* Sector specific refinance
*Strengthening and supporting small local banks.

Technology & Central Banks:

So why are central banks interested?

The widespread adoption of technology by the banking industry
The impact of technology on every single core central banking function
*Supervision and Regulation & Currency Management
*Monetary & Financial Stability

The potential technology offers to central banks for regarding more effective its internal
processes & functions.

Currency Management- RBI Initiatives:

The Clean Note Policy( 1999)

Establishment of 2 state of the art currency presses
Technology driven anti counterfeit measures
48 fully automated currency verification and processing systems
21 shredding and Briquetting Machines.

RBI Initiatives in Payment & Settlement System :

The IDRBT :
Network Externalities
*The Indian Financial Network (INFINET)
Messaging Solution
*The structured Financial Messaging System (SFMS)
Security
*Public Key Infrastructure.

The securities settlement system

Providing centralized depository and settlement services
Seamlessly integrated with the NDS &RTGS systems
The clearing corporation of India
Secured netting services with central
G-sec and Forex segments
Elimination of settlement risk with liquidity saving elements.

RBI as a user of technology:

Customer service
*improvements in payment & settlement systems
*MICR Clearing- enabling faster clearing of cheques
*Cheque truncation & E- cheques (drawing board)
*ECS/ EFT- enabling T+ 2 settlement of our equities market
*National EFT- Enabling T+0 settlement of all customer funds transfer
transaction.

India and the IMF :

India and the IMF has a positive relationship. The IMF has provided financial assistance
to India, which has helped in boosting the countrys economy.
The IMF praises the Country for it was able to avoid the Asian Financial Crisis in 1999
and was also able to maintain the average rate of growth of its economy.
The IMF works to foster global growth and economic stability. It provides policy advice
& financing to members in economic difficulties and also work with developing nations
to help them achieve macroeconomic stability and reduce poverty.

CONCLUSION:
Central bank plays important role in achieving economic growth of a developing
country It promotes economic growth with stability It helps in attaining full
employment balance of payment disequilibrium and in stabilizing exchange rate
RBI is an autonomous body promoted by the government of India and is
headquartered at Mumbai RBI is an autonomous body promoted by the
government of India and is headquartered at Mumbai treasury foreign exchange
movements and is also the primary regulator for banking and non- banking financial
institutions The RBI operates a number of government mints that produce
currency and coins

Role of RBI in economic development Development of banking system Development of

financial institutions Development of backward areas Economic stability Economic
growth Proper interest rate structure Miscellaneous

BIBLOGRAPHY:
www.google.com
www.rbi.org.in
www.financialexpress.com
www.slideshare.net
www.scribd.com