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A

Presentation
on
Role of Reserve Bank Of
India
in
Indian Economy
Presented By:
Sachin Nandha
Preamble :
"...to regulate the issue of
Bank Notes and keeping of
reserves with a view to
securing monetary stability in
India and generally to operate
the currency and credit
system of the country to its
advantage."
Retrospect
• Central Bank is an apex financial institution of
a country.
• The Reserve Bank of India started working
since, 1st April, 1935 in accordance with the
provision of the Reserve Bank of India Act,
1934.
• Initially, the RBI was established as
shareholder’s bank.
Nationalization of RBI
Since January 1, 1949, the the reserve bank of
India is functioning as a state owned and state
controlled(nationalized) bank.
RBI was nationalized in tune with the
changing national and international political
and economical scenario.
Organization & management of
RBI :
Central Board of Directors

Governor

Deputy Governors

Directors

Local Boards
Role of Reserve Bank of India
 Issue of notes
 Banker, Agent and advisor to the Government
 Banker’s Bank
 Custodian of Foreign Exchange Reserves
 Regulation of Banking System
 Credit Control
 Other Functions
Issue of notes
The Reserve Bank of India enjoys monopoly
in the issue of currency notes as central Bank
of the country.
In the year of 2006-07 reserve bank has
allotted Rs. 2020 crore to security press for
printing of notes and the number of units
printed in this year stands at 1248.4 crore.
Against it in the year of 2007-08 (June-July) it
has allocated Rs. 2026 crore and the number
of units printed is 1393.
Money supply
22.5
21.3 22.4 20

22.4

19.4
Banker, Agent and advisor to the
Government
736
Banker’s Bank
As an apex bank the RBI acts as banker of the
banks and lender of the last resort.
In case of need of funds, commercial banks
can borrow funds from Reserve Bank on the
basis of eligible securities or get financial
accommodation in times of need or stringency
by rediscounting their bills of exchange.
Custodian of Foreign Exchange
Reserves
Maintaining external value of rupee.
Adopting appropriate monetary polices for the
economic stability in the country and thereby
exchange stability in the long-term.
Movement of rupee vis-à-vis US dollar

1
2 4

3
Credit Control
The reserve Bank is the most appropriate
body to control the creation of credit.
For smooth functioning of the economy
RBI control credit through,
• Quantitative or General Methods.
• Qualitative or selective methods.
I. Quantitative or General Methods

1) Cash Reserve Ratio (CRR)


2) Statutory Liquidity Ratio (SLR)
3) Bank Rate
4) Open Market Operation (OMO)
5) Repo and Reverse repo rate
Cash Reserve Ratio (CRR)
CRR, or cash reserve
ratio, refers to a portion of
deposits (as cash) which
banks have to
keep/maintain with the
RBI
Statutory Liquidity ratio
• Banks are required to invest a portion of their
deposits in government securities as a part of
their statutory liquidity ratio (SLR)
requirements.
Bank rate
• Bank rate is the minimum rate at which the
central bank provides loans to the commercial
banks.
Open Market Operation
• An important instrument of credit control, the
Reserve Bank of India purchases and sells
securities in open market operations.
Repo rate & Reverse repo rate
A repurchase
agreement or ready
forward deal is a
secured short-term
(usually 15 days) loan
by one bank to
another against
government securities.
I. Qualitative or selective methods

1) Selective credit control


2) Rationing of Credit
3) Moral Persuasion
4) Direct action
Regulation of Banking System
Regulate the banking system.
It has power of
– Licensing
– management
– branch expansion
– power of inspection of bank
– power to issue directions
Other Functions
i. Agriculture Credit
ii. Industrial Finance
iii. Publication of Data
iv. Banking Education and Training
v. Remitting Facility
vi. Conversion of currency
vii. To accept Deposits
viii.Transactions with international institutions
i. Transactions in precious metals
ii. Expansion of Banking facilities
iii. Supply of Development Finance
Thank you