Role of RBI in Indian Banking System

1. Seminar & Group Discussion
BBM-206
Topic-Role Of RBI in Indian
Banking System
Presented To-Jaspreet Kaur Ma’am
Presented By-Shalu Nisha
Roll No.-2004448
Course-BBA Regular
Email id-
shalunisha786@gmail.com

2. TOPICS TO BE COVERED IN THE
PRESENTATION
 INTRODUCTION
 HISTORY OF RBI
 ORGANIZATIONAL STRUCTURE OF RBI
 STRUCTURE OF BANKING IN INDIA
 ROLE OF RBI IN INDIAN BANKING
SYSTEM
 CONCLUSION

3. INTRODUCTION
The Reserve Bank of India (RBI) is India's Central banking institution, which
controls the monetary policy of the Indian rupee. It is the apex bank in the
Indian Banking System. The Preamble of the Reserve Bank of India describes
the basic functions of the Reserve Bank as:
"...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."
The Reserve Bank of India has four zonal offices at :
1. Chennai
2. Delhi
3. Kolkata
4. Mumbai.
It has 19 regional offices & 11 sub-offices.

4. HISTORY OF RBI
 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 Crores divided into shares of 100 each
fully paid, which were initially owned entirely by private shareholders.
 Following India's independence,the RBI was nationalized on 1st January 1949.
 RBI 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 RBI served as the central bank of Pakistan up to June 1948 when the State
Bank of Pakistan commenced operations.

5. ORGANIZATIONAL STRUCTURE
OF RBI
 The Central Board of Directors is the
main committee of the RBI. The
Government of India appoints the
directors for a 4-year term.
 The Board consists of a Governor,
and not more than 4 Deputy
Governors, 4 Directors to represent
the regional boards, 2 from the
Ministry of Finance and 10 other
directors from various fields.
 The bank is headed by the Governor
and the post is currently held by
economist Shri Shaktikanta Das.
There are 4 Deputy Governors, Rabi
Sankar, Rajeshwar Rao, M. D. Patra,
M. K. Jain.

7. ROLE OF RBI IN INDIAN
BANKING SYSTEM
 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.
 ISSUER OF CURRENCY-
The bank issues and exchanges currency notes and
coins and destroys the same when they are not fit
for circulation.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.

9. ROLE OF RBI IN INDIAN BANKING
SYSTEM
 ISSUER 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) Since April 2014, the RBI has granted 23 new
banking licences. Entities / groups in the private sector, entities
in public sector and Non-Banking Financial Companies (NBFCs)
shall be eligible to set up a bank through a wholly-owned Non-
Operative Financial Holding Company (NOFHC). They will also
need to have a sound & successful track record of 10 years.
Various Banks have been given the license like: Universal Banks,
Payments Bank, Small Finance Banks, IDFC Vodafone, M- pesa
Equitas, Holdings Bandhan Bank, Fino PayTech, Utkarsh Micro
Finance.

10. ROLE OF RBI IN INDIAN
BANKING SYSTEM
BANKER’S BANK –
 RBI is bank of all banks in India. As a banker of banks, RBI:
Enables smooth and swift clearing and settlements of inter-bank
Transactions.
 Provides efficient means of funds transfer for all banks
Enables banks to maintain their accounts with RBI for statutory
reserve requirements and maintenance of transaction balances.
 Regulates opening of New ATMS & Branches of
Commercial Banks
 Why RBI is called as banker's bank ?
1. Provides loan to banks/bankers. 2. Accept Deposits of
2. Banks. 3. Rediscount the bills of Banks.

11. ROLE OF RBI IN INDIAN
BANKING SYSTEM
LENDER OF LAST RESORT
-
 The banks can borrow from the RBI by keeping
eligible securities as collateral or any other
arrangement and at the time of need or crisis, they
approach RBI for financial help.Thus RBI works as
Lender of the Last Resort (LORL) for banks.
ACTS AS CLEARING HOUSE-
 Clearing Houses facilitate the exchange of
instruments and processing of payment instructions at
a central point among the participating banks.
 RBI acts as a Clearing House for settlement of
Banking transactions.
 It is a member bank of the Asian Clearing Union.
 RBI manages 14 clearing houses of the country
situated in different

12. ROLE OF RBI IN INDIAN BANKING
SYSTEM
MANAGER OF FOREIGN EXCHANGE-
 RBI is required to maintain external value of Rupee.
For this purpose it acts as a custodian of FOREX.
 On a given day, the foreign exchange rate reflects the
demand for and supply of foreign exchange arising
from trade and capital transactions.The RBI’s Financial
Markets Department (FMD) participates in the
foreign exchange market by undertaking sales /
purchases of foreign currency to ease volatility in
periods of excess demand for/supply of foreign
currency.
 Administer and enforces the provision of Foreign
Exchange Management Act (FEMA), 1999.

13. Conclusion
 The Reserve Bank of India (RBI) is India's
Central bank & apex bank in Indian
banking system.
 Commenced business on 1st April 1935 in
accordance with the provisions of the
Reserve Bank of India Act, 1934.
 It Plays an important role in strengthening,
developing and diversifying the country’s
economic & financial structure.

14. THANK YOU SO MUCH
Any Question…..?