rq3109b34 case study mgt527 ppt of ocd

8/18/2019 RQ3109B34 Case Study MGT527 Ppt of Ocd

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Reserve bank of India: a caseof organizational evolution

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Reserve bank of India: a case oforganizational evolution

&is resentation as atteted to cature te canging features central banking in India since te incetion of te Reserve ,ank in

1)34

5ollo6ing functions ave been discussed in tis resentation:

Regulation and suervision

5inancial arketsMonetar7 8scal interface

+7naics of te balance seet


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Role of central banks acrosste 6orld:

9entral banks ave la7ed an increasingl7 iortant role inacroeconoics olic7 aking and ave continuall7

reoriented teir olicies to coe 6it ne6 callenges trust

uon te4

9entral banks ave taken a 6ole range of functions:

•

+eterine onetar7 olic7• Regulating and suervising te banking s7ste

• /erforing a crucial role in te a7ent and settleent s7ste

• $eek to aintain 8nancial stabilit7 in te econo74


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Adotion of ,asel nors as not onl7 brougt regulation andrisk anageent in focus but also eled in universalizingunifor standards across te banks in dierent countries4

9entral banks ave occuied te center stage of te 8nancial

s7ste in an7 econo7 desite a continuous cange in teirfunctions and are e;ected to continue to ake a signi8cant

contribution in olic7 aking and 8nancial stabilit74


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%volution of central banking inIndia:

&ere is no standard international odel for te evolution ofcentral bank4

&e Reserve ,ank as gone incessant transforation and assuccessfull7 oerated in distinctl7 dierent regies since 1)34

It 6as a rivatel7 o6ned institution4

&e central o


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&ransforation in 9entral bankinfunctions:

&e transforation in central banking functions over te decades

can be traced >uite convenientl7 troug te dierent ases4 In te earl7 7ears= te ain functions 6ere

• Note issuance4

• ,eing banker of te 'overnent4

e4g4: 6ar 8nance= adinistered e;cange control4

In its forative 7ears= tere 6as no foral onetar7 olic7forulation oter tan regulating te sul7 and deand for creditin te econo74

&e functions of te reserve bank becae ore diversi8ed 6it telaunc of 8ve?7ear lans in 1)14

&e develoental ase tat follo6ed ainl7 involvingnationalization of banks and directed riorit7 sector lending= 6ascaracterized b7 a nuber of controls and regulations4


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@iberalization of te %cono7:

In 1))0s= te rocess of liberalization of te econo7 addedseveral ne6 diensions to te resonsibilities of te Reserve ,an

&e 8rst ase of refors focused on

• deregulation of te banking industr7

• $trengtening of te institutional frae6ork in banking

• Non?banking 8nancial coanies and 8nancial institutions trougrudential nors

• Iroveent in a7ent and settleent s7stes4

&e second ase of refors easized te adotion ofrudential nors in te 8nancial s7ste in a gradual anner 6itan obective to coverage to te international standards4


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Regulation and suervision

&e regulation and suervisor7 role of te R, gained afterindeendence and as been focus since te nationalization of

coercial banks in 1)B)4

It regulate aor art of 8nancial s7ste covering coercialbanks= cooeratives banks4

It ensuring sounding soundness of banking oeration and

rotection of sall deositors4

Nationlisation succeeded in sreading te net6ork of banks in

rural areas and obilizing rivate savings4

Reserve bank initated $trengten te urban cooerative bank

C*9,sD4


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&o acieve te international e;cellence= banking s7ste coetand innovate troug induction of ne6 tecnolog7= iroved

credit risk araisal etc4

&o infuse arket disciline= a ke7 obective of rivatization= teublic sector banks ave been listed in te stock arket4

In recognition of te iortance of a7ent and settleent

s7stes= te R&'$ s7ste 6as oertionalised in arc 200( totake care of interbank transactions4

&e reserve bank as la7ed a roactive role in te

ileentation of I& in banking sector and iroved custoer

service and overall s7steic e


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5INAN9IA@ MARK%&+%E%@-/M%N&$

&e reserve bank= like oter central banks as taken a keeninterest in te develoent of 8nancial arkets= eseciall7 te

one7= governent securities and fore; arkets4

adinistered interest rates= directed credit= 6eak banking

structure= lack of roer accounting and risk anageents7stes indered arket develoent in India until te 1))0s4


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Ho6 to develo

sound 8nancial institutions= a favorable legal frae6ork= tecnologi

is needed for arket develoent4 'ro6ing size=det and activit7=aving te 6a7 for a Fe;ible use of

onetar7 olic7 instrunents b7 te onetar7 autorit74

te reserve bank as been constantl7 re8ning te oerating roced

instrunents


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5inancial arkets develoent in India= aart fro irovingonetar7 olic7 transission ecanis= as also facilitated te

s6itcover of easis of te onetar7 olic7 fro credit

allocation to onetar7 and subse>uentl7 to te ultile indicatoraroac4


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M-N%&ARG 5I$9A@ IN&%R5A9%

&e onetar7 8scal interface in India ost?indeendence=follo6ed a se>uence t7ical of a develoing countr7 6ereb7

onetar7 olic7 6as e;ected to accoodate te

e;ansionar7 8scal olic74 &e istor7 of onetar7 8scalinterface in India oers useful lessons fro te reserve banks

e;erience over te ast seven decades4


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Ke7 d7naics of 8scal onetar7ne;us

In India te oint olic7 initiatives b7 te governent and tereserve bank ave facilitated te acieveents of a rearkable

degree of coordination bet6een debt anageent and onetar

olic7 forulation4

&e reserves banks e;erience in anaging governent

borro6ings over te 7ears as e>uied it 6it te re>uisite

tecnical e;ertise to e


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$igni8cant canges

&e central governent 6ould cease to oerate as aninterediar7 for obilizing resources for states 6it te latter

ave to raise funds directl7 fro te arket4

&e reserve banks 6itdra6al fro articiation in te riar7arket of governent securities4

&e ileentation of te roosed aendent to te banking

regulation act eritting e;ibilit7 in reserve ratios to banks6ould reduce te cative subscrition to te governentsecurities4


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,anks e;erience

&e canging ases of te 8scal olice fro 8scal neutralit7 to8scal doinance and furter to 8scal consolidation4

It 6as te icroeconoic crisis of 1))1 6ic igligted te

urgenc7 to address te 8scal doinance over onetar7 olic7 4

A istoric agreeent 6as signed bet6een te governent and

te reserve bank4

A signi8cant ste in cororation and understanding bet6een te8scal and onetar7 autorities4


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&H% R%$%RE% ,ANK ,A@AN9%$H%%& &e balance seet of central bank is = in an7 6a7s= uni>ue in carac

5ro te riar7 of note issuance function during te forative 7ears

ascendance during te earl7 ase &e reserve bank balance seet afundaental cange

larger balance seet does not necessaril7 connote a sound acro eco

a transarent balance seet enance te credibilit7 of te central bane


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9-MM*NI9A&I-N /-@I9G

&ransarenc7 as assued rene6ed focus 6it a clear couni

olic7 of te bank 4

tree ain features?transarenc7= tieliness and credibilit74

&e obective of counication olic7 is acieved troug e;tendisseination of inforation on te banks olicies and te roce

teir foration4


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A$$%$$M%N&

central banks ave successfull7 continued to adat to te canging

environent4

te focus as been te 6elfare of te general ublic4

te arkets= te obectives and instruents of onetar7 olic7 a

= te central bank ave establised teselves as a necessar7 and

eranent art of te 8nancial s7ste4

=te reserve bank as earned international credibilit7 in ters of e<

olicies4

&e reserve bank as anaged to evolve constructivel7 on a conti

to coe 6it deands for stable acroeconoic gro6t and devel


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& 0 a n k 7 o u

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rq3109b34 case study mgt527 ppt of ocd

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