CHAPTER 01-RESERVE BANK OF INDIA INTRODUCTION

HISTORY It was established on 1 April 1935 during British Raj in

accordance with the provisions of Reserve Bank of India Act 1935.

1913-Chamber lane commission suggest a central bank for India

1926-Royal Commission/ Hilton Young Commission again suggested a central Bank for India.

It began according to the guidelines laid down by Dr. Ambedkar . He presented guidelines, working style and outlook in from of Hilton Commission.

1 Jan 1949-Nationalization of RBI under public ownership act (1948) as government acquired private share holding.

It was established on 1 April 1935 with a capital of 5 crore. This capital was divided into shares equity of Rs. 100 each. In the beginning, the ownership of almost all the share was with a non government share holders.

WHAT IS RBI? RBI in India is a Central Banking Institution, which

controls the MONETARY POLICY of Indian Rupee. MONETARY POLICY-Monetary Policy is the process by

which the government, central bank or Monetary authority of a country controls-

(i) The Supply of Money

(ii) Availability of Money

(iii) Cost of Money or Rate of Interest to attain a set of objectives oriented towards growth and stability of the economy.

Monetary Policy rests on the relationship between the rates of interest in an economy, that is the price at which money can be borrowed.

It is a member bank of ASIAN CLEARING UNION

STRUCTURES OF RBI The general superintendence and direction of RBI is entrusted with

21 members- Central Board of Directors- Governor Four Deputy Governor

(i) 1 Zone- RBI owners (RBI employers)-2 persons

(ii) CMD of Any Commercial Bank

(iii) Any Economist of India Two finance Ministry Representatives 10 government nominated directors to represent important element

from India’s Economy. Four Directors to represent local board headquarters at Mumbai,

Delhi, Kolkata and Chennai Each of the local board consists of 5 members who represent regional

interests as well as interest of co-operative & indigenous bank.

FUNCTIONS OF RBI Monetary Authority Issuer of Currency (Issue Notes) Banker’s to Bank (Banker’s Bank) Manager to foreign exchange (Forex) Banker and & debt Manager to

government Regulator and Supervisor of the

payment & settlement system Development Role Regulator of the banking System

SUBSIDIARIES OF RBI Deposit Insurance and credit guarantee

Corporation (DICGC) Bhartiya Reserve Bank Note Mudran

Private Limited National Bank For Agriculture and Rural

Development (NABARD) NABARD is partially owned