This is about the Financial System and RBI of India.

1. Role of RBI and its salient
features in Indian Banking
System
Presented by:
Nikita Agarwal
Deepak Kumar
Abilash Kumar Bhagat
Yashaswini Sharma

2. Indian Banking System
 A banking system is a group or network of
institutions that provide financial services for us.
These institutions are responsible for operating a
payment system, providing loans, taking deposits,
and helping with investments.

3. Structure of IBS

4. RBI
 RBI is India’s central banking institution which control the
monetary policy of Indian rupee.
 It is the main governing body in Indian banking system.
 The main function of RBI, “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.”
 RBI having19 regional offices and 10 sub offices.

5. History
 It commenced its operations on 1st April 1935 during the
British Rule in accordance with the provisions of the
Reserve Bank of India Act, 1934 by the recommendation
of Hilton-Young Commission.
 The original share capital was Rupees Five Crore divided
into shares of 100 each fully paid, which were initially
owned entirely by private shareholders.

6. Cont’d:
 Following India's independence, the RBI was nationalized
on 1st January 1949.
 Reserve Bank continued to act as the Central Bank for
Burma (Myanmar) till Japanese Occupation of Burma
(1942–45) and later up to April,1947.
 After the partition of India, the Reserve Bank served as the
central bank of Pakistan up to June 1948 when the State
Bank of Pakistan commenced operations.

7. Organizational Structure
 Governor: Urjit R. Patel
 Deputy governors:
i. Shri N.S. Vishaswnathan
ii. Dr. Viral V. Acharya
iii. Shri B.P. Kanunga

8. Roles of RBI
 Monetary Authority
 Regulator and Supervisor of the Financial System
 Regulator and Supervisor of the Payment Systems
 Manager of Foreign Exchange
 Issuer of Currency
 Developmental Role
 Banker to the Government
 Issue of Banking License

9. Monetary Authority
 RBI controls the supply of money in the economy by its
control over interest rates in order to maintain price
stability and achieve high economic growth using Monetary
Policy.
 Main Aim of Monetary Policy is to:
1. Stabilize exchange rate
2. Maintain Healthy Balance of Payment
3. Attain Financial stability
4. Control inflation
5. Strengthen Banking System

10. Cont’d
Quantitative Measures of Credit Control:
 Bank Rate: Rate at which RBI discounts bills of
commercial banks.
 Cash Reserve Ratio (CRR): Portion of Deposit which
commercial banks have to keep with RBI in the form of
Cash Reserves.
 Statutory Liquidity Rate (SLR): Portion of Total Deposit
which commercial banks have to keep with RBI in the form
of Liquid Assets, i.e. Gold, Cash or Approved Government
securities.

11. Cont’d
 Repo Rate: Rate at which Commercial Banks borrow
money from RBI.
 Reverse Repo Rate: Rate at which RBI borrows money
from Commercial Banks.

12. Regulator and Supervisor of the
Financial System
 Financial regulation is a form of regulation or supervision,
which subjects financial institutions to certain
requirements, restrictions and guidelines, aiming to
maintain the integrity of the financial system. This may be
handled by either a government or non-government
organization.

13. Regulator and Supervisor of the
Payment Systems
 The Board for Regulation and Supervision of Payment and
Settlement Systems (BPSS), a sub-committee of the
Central Board of the Reserve Bank of India is the highest
policy making body on payment systems in the country.
The BPSS is empowered for authorizing, prescribing
policies and setting standards for regulating and
supervising all the payment and settlement systems in the
country. The Department of Payment and Settlement
Systems of the Reserve Bank of India serves as the
Secretariat to the Board and executes its directions.

14. Manager of Foreign Exchange
 RBI manages forex under the FEMA- Foreign
Exchange Management Act, 1999. In order to
facilitate external trade and payment promote
development of foreign exchange market in India.

15. Issuer of currency
 The bank issues and exchanges currency notes and
destroys the same when they are not fit for circulation.
 Minting coins is done by government of India.
 The objectives are to issue bank notes and giving public
adequate supply of the same, to maintain the currency and
credit system of the country to utilize it in its best
advantage, and to maintain the reserves.

16. Developmental Role
 RBI performs a wide range of promotional functions to
support national objectives. Under this it setup institutions
like NABARD, IDBI, SIDBI, NHB, etc.

17. Banker to the Government
 RBI transacts all banking business of the government,
which involves the receipt and payment of money on
behalf of the government and carrying out of its exchange,
remittance and other banking operations.
 Agent of Government of India in the IMF.

18. Issue of Banking License
 Every Bank has to obtain a Banking License from RBI to
conduct banking business in India (As per Sec 22 of
Banking regulation Act) .
 Under Raghuram Rajan governace 23 new banks get
license.

19. Salient Features of RBI
 Banker’s Bank.
 Last Resort of Bank.
 Bank which have monopoly over Note Issue.
 Central Bank is Government’s Bank.
 Provide Loans to Government.
 Maintaining the Gold Reserve.

20. Banker’s Bank:
 RBI prescribes the broad parameters of banking
operations within which the entire banking and financial
system operates in the country.
 RBI holds a part of the cash reserves of commercial banks
and lends them funds for short periods. All banks are
required to maintain a certain percentage of their total
liabilities.

21. Last Resort of Bank:
 RBI as an institution, usually a country's central bank, that
offers loans to banks or other eligible institutions that are
experiencing financial difficulty.
 RBI provides financial assistance to commercial banks and
State cooperative banks through rediscounting of bills of
exchange.

22. Bank which have Monopoly over
Note Issue:
 RBI acts as a sole currency authority of the country, it
issues notes of every denomination except one-rupee note
and coins and small coins through the Issue Department of
the Bank.
 Its not only issues currency but also exchanges or
destroys currency and coins not fit for circulation.

23. Central Bank is Government’s
Bank:
 RBI is India's central banking institution, which controls
the monetary policy of the Indian rupee.
 RBI plays an important part in the Development Strategy of
the Government of India.
 RBI have a monetary policy framework to meet the
challenge of an increasingly complex economy.

24. Provide Loans to Government:
 Funds for lending to Government are from deposits
maintained by Banks in Deposit Accounts Department of
the Bank.
 RBI is one of the items of income is interest earned on
loans and advances to State Government.

25. Maintaining the Gold Reserve:
 In India, RBI as Minimum Reserve System.
 Reserve Bank of India (RBI) maintains gold and foreign
exchange reserves of Rs. 200 crores.
 RBI need not maintain exact gold reserve now for minting
more money.

26. Thank You