Reserve Bank of India

The Reserve Bank of India is the central bank of India, was established on April 1, 1935 during the British-Ra in accordance with the pro!isions of the Reser!e Bank of India Act, 193"# The $entral %ffice of the Reser!e Bank was initiall& established in 'olkata, Bengal, but was per(anentl& (o!ed to )u(bai in 193*# Though originall& pri!atel& owned, the RBI has been full& owned b& the +o!ern(ent of India since nationali,ation in 19"9# The Reser!e Bank of India was set up on the reco((endations of the Hilton Young Commission# The co((ission sub(itted its report in the &ear 19-., though the bank was not set up for nine &ears# The /rea(ble of the Reser!e Bank of India describes the basic functions of the Reser!e Bank as to regulate the issue of Bank 0otes and keeping of reser!es with a !iew to securing (onetar& stabilit& in India and generall& to operate the currenc& and credit s&ste( of the countr& to its ad!antage#

Main Functions of RBI

Reser!e Bank of India is the (ain (onetar& authorit& of the countr&# It for(ulates i(ple(ents and (onitors the (onetar& polic& and thereb& pla&s a ke& role in (aintaining price stabilit& and ensuring ade1uate flow of credit to producti!e sectors# RBI is the regulator and super!isor of the financial s&ste( in the countr&# It prescribes broad para(eters of banking operations within which the countr&2s banking and financial s&ste( functions# It (anages the foreign e3change of the countr&# /erfor(s (erchant banking function for the central and the state go!ern(ents4 also acts as their banker# )aintains banking accounts of all scheduled banks# Issues and e3changes or destro&s currenc& and coins not fit for circulation#

Main objectives
Monetary Authority

5or(ulates i(ple(ents and (onitors the (onetar& polic&# %b ecti!e6 (aintaining price stabilit& and ensuring ade1uate flow of credit to producti!e sectors#

Regulator and su ervisor of the financial system

/rescribes broad para(eters of banking operations within which the countr&2s banking and financial s&ste( functions# %b ecti!e6 (aintain public confidence in the s&ste(, protect depositors2 interest and pro!ide cost-effecti!e banking ser!ices to the public# The Banking %(buds(an

7che(e has been for(ulated b& the Reser!e Bank of India 8RBI9 for effecti!e redresses of co(plaints b& bank custo(ers#

Manager of e!change control

)anages the 5oreign :3change )anage(ent Act, 1999# %b ecti!e6 to facilitate e3ternal trade and pa&(ent and pro(ote orderl& de!elop(ent and (aintenance of foreign e3change (arket in India#

Issuer of currency

Issues and e3changes or destro&s currenc& and coins not fit for circulation# %b ecti!e6 the (ain ob ecti!e is to gi!e the public ade1uate suppl& of currenc& of good 1ualit& and to pro!ide loans to co((ercial bank to (aintain or i(pro!e the +;/ 8+ross ;o(estic /roduct9#

The basic ob ecti!es of RBI are to issue bank notes, to (aintain the currenc& and credit s&ste( of the countr& to utili,e it in its best ad!antage, and to (aintain the reser!es# RBI (aintains the econo(ic structure of the countr& so that it can achie!e the ob ecti!e of price stabilit& as well as econo(ic de!elop(ent, because both ob ecti!es are di!erse in the(sel!es#

"evelo mental role

/erfor(s a wide range of pro(otional functions to support national ob ecti!es #

Related functions

Banker to the +o!ern(ent6 perfor(s (erchant banking function for the central and the state go!ern(ents4 also acts as their banker# Bank to banks6 (aintains banking accounts of all scheduled banks

There is now an international consensus about the need to focus the tasks of a central bank upon central banking# RBI is far out of touch with such a principle, owing to the sprawling (andate described abo!e# The recent financial tur(oil world o!er, has howe!er, !indicated the Reser!e Bank2s role in (aintaining financial stabilit& in India#

Central Board#

The RBI is (onitored b& a central board of directors# The board is appointed b& the +o!ern(ent of India in accordance with the RBI act#

$ocal Boards

<ocal Boards are present in the four (etros of )u(bai, $alcutta, $hennai and 0ew ;elhi# <ocal Board consists of fi!e (e(bers#

<ocal Board is appointed b& the $entral +o!ern(ent# <ocal Board is for a period of four &ears#

Financial %u ervision#
The RBI acco(plishes the role of financial super!ision through the Board for 5inancial 7uper!ision 8B579#The B57 was initiated in 199"#

Functions of BF%

7trea(lining the s&ste( of bank inspections# Induction of offsite sur!eillance# $onsolidating the role of statutor& auditors and $onsolidating the internal defenses of super!ised institutions#

Current Focus of BF%

7uper!ise financial institutions# $onsolidate accounts# ;eal with legal issues in bank frauds# =ariance in assess(ent of nonperfor(ing assets and 7uper!isor& rating (odel for banks#

$egal Frame&ork# 'mbrella Acts

Reser!e Bank of India Act 193" go!erns the Reser!e Bank functions# Banking Regulation Act 19"9 go!erns the financial sector#

(overnor of RBI#
;r# ;u!!uri 7ubbarao is the current +o!ernor of RBI since 7epte(ber -, ->>?# @ho succeeded Aaga =enugopal Redd&# It has -- regional offices, (ost of the( in state capitals#

Board of directors

The Reser!e Bank2s affairs are go!erned b& a central board of directors# The board is appointed b& the +o!ern(ent of India in keeping with the Reser!e Bank of India Act# %n Bune -*, ->>., the Cnion +o!ern(ent of India reconstituted the $entral Board of ;irectors of the Reser!e Bank of India 8RBI9 with 13 (e(bers, including A,i( /re( i and 'u(ar )angala( Birla#

)ther members of the board

7uresh Tendulkar, :cono(ist and )e(ber, /ri(e )inister2s :cono(ic Ad!isor& $ouncil 8to represent :astern Area <ocal Board9 C# R# Rao, for(er $hair(an, I7R% and $hair(an Research $ouncil, /h&sical Research <aborator&, ;epart(ent of 7pace 8to represent 0orthern Area <ocal Board9 <aksh(i $hand, IA7 8Retd#9 8to represent 7outhern Area <ocal Board9 7hashi Rekha Ra agopalan, $onsultant, $o-operati!es 7uresh 'u(ar 0eotia, $hair(an, A(bu a $e(ent A# =aid&anathan, )adras Institute of ;e!elop(ent 7tudies )an )ohan 7har(a, 5R7, 5or(er ;irector, )u(bai Cni!ersit& Institute of $he(ical Technolog& ;# Ba&a!arthana!elu, $hair(an and )anaging ;irector, <a3(i )achine @orks <td#

*hose renominated to the board

A# D# )alega(, $hartered Accountant, 8to represent @estern Area <ocal Board9 D# /# Ranina, 7upre(e $ourt Ad!ocate Ashok 7# +angul&, )e(ber, In!est(ent $o((ission and $hair(an, I$I$I %ne7ource

%ubmitted by#

"e&asish (hoshal 8/+;)A9

0AAR), D&derabad