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 Reserve Bank of India

Headquarters Mumbai, Maharashtra, India

Established 1 April 1935
Governor Duvvuri Subbarao
Central bank of India
Currency Indian Rupee Symbol:
Reserves $287.37 billion(2009)
Base borrowing rate 5.2%
Base deposit rate 9.5%
Website rbi.org.in
(he Reserve Bank of India (RBI, Hindi: èèèèèèèèèèèèè
èèèè) is the central banking system of India and controls the
monetary policy of the rupee as well as US$287.37 billion (2009) of
currency reserves. (he institution was established on 1 April 1935
during the British-Raj in accordance with the provisions of the Reserve
Bank of India Act, 1934 and plays an important part in the
development strategy of the government.
(he central bank had 22 governors since 04.01.1935. (he regular term of
office is a four years period, appointed by the national administration.

(he Reserve Bank of India has four regional representations: North in

New Delhi, South in Chennai, East in Kolkata and West in Mumbai.
(he representations are formed by five members, appointed for 4 years
by the central government and serve - beside the advice of the Central
Board of Directors - as forum for regional banks and to deal with
delegated tasks from the central board.
(he Reserve Bank of India has branch offices at most state capitals and at
a few major cities in India -
viz. Ahmadabad, Bangalore, Bhopal, Bhubaneswar, Chandigarh, Chen
nai, Delhi,Guwahati, Hyderabad, Jaipur, Jammu,Kanpur, Kolkata, Luck
now, Mumbai, Nagpur, Patna, and (hiruvananthapuram.
Besides it has sub-offices
at Dehradun, Gangtok, Kochi, Panaji,Raipur, Ranchi, Shimla
and Srinagar.
(he Bank has also two training colleges for its officers, viz. Reserve Bank
Staff College at Chennai and College of Agricultural Banking at Pune.
(here are also four Zonal (raining Centers
at Belapur, Chennai, Kolkata and New Delhi.
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Monetary Authority:
(he Reserve Bank of India is the main monetary authority of the
country and beside that the central bank acts as the bank of the
national and state governments. It formulates, implements and
monitors the monetary policy as well as it has to ensure an adequate
flow of credit to productive sectors.
(he RBI controls the monetary supply, monitors economic indicators like
the gross domestic product and has power to the design of the rupee
banknotes as well as coins.
Manager of Exchange control:
(he central bank manages to reach the goals of the Foreign Exchange
Management Act, 1999.
Issuer of Currency:
(he bank issues and exchanges or destroys currency and coins not fit for
circulation and to provide loans to commercial banks to maintain or
improve the GDP.
Developmental Role:
(he central bank has to perform a wide range of promotional functions to
support national objectives and industries. (he RBI faces a lot of
intersectional and local inflation-related problems. Some of this
problems are results of the dominant part of the public sector.
Related Functions:
(he RBI is also a banker to the Government and performs merchant
banking function for the central and the state governments. It also acts
as their banker. (he National Housing Bank (NHB) was established in
1988 to promote private real estate acquisition. (he institution
maintains banking accounts of all scheduled banks, too.
÷ (he term monetary policy refers to actions taken by central
banks to affect monetary magnitudes or other financial
conditions.
÷ Monetary Policy operates on monetary magnitudes or
variables such as money supply, interest rates and
availability of credit.
÷ Monetary Policy ultimately operates through its influence
on expenditure flows in the economy.
÷ In other words affects liquidity and by affecting liquidity,
and thus credit, it affects total demand in the economy.
÷ M1 = Currency with public+
Demand deposits with banks+
Other Deposits with RBI
÷ M2 = M1+ Post Office Deposits
÷ M3 = M1+ (ime Deposits with Banks
÷ M4 = M3+ (otal Post Office Deposits
÷ MP is a part of general economic policy of the govt.
÷ (hus MP contributes to the achievement of the goals of
economic policy.
÷ Objective of MP may be:
Full employment
Stable exchange rate
Healthy BoP
Economic growth
Reasonable Price Stability
Greater equality in distribution of
income & wealth
Financial stability
Instruments
1. Discount Rate
(Bank Rate)

2.Reserve Ratios Operating

Target
3. Open Market
Operations
Î Monetary Base
Î Bank Credit Intermediate
Î Interest Rates Target
ÎMonetary
Aggregates(M3)
Ultimate
ÎLong term Goals
interest rates
ÎTotal Spending
Î Price Stability
Etc.
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