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Banking Awareness : RBI structure & Function.

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Reserve Bank of India

Establishment:

The Reserve Bank of India was established in 1935 under the provisions of the Reserve Bank of India Act, 1934 in Calcutta, eventually moved permanently to Mumbai. Though originally privately owned, was nationalized in 1949.

Organisation and Management:

The Reserve Bank”s affairs are governed by a central board of directors. The board is appointed by the Government of India for a period of four years, under the Reserve Bank of India Act.

♦ Full-time officials : Governor and not more than four Deputy Governors. The current Governor of RBI is Mr. Urjit Pattel.There are 3 Deputy Governors .
♦ Nominated by Government: ten Directors from various fields and two government Officials
♦ Others: four Directors – one each from four local boards

 

Main Role and Functions of RBI

♦ Monetary Authority: Formulates, implements and monitors the monetary policy for A)  maintaining price stability, keeping inflation in check ; B) ensuring adequate flow of credit to productive sectors.

♦ Regulator and supervisor of the financial system: lays out parameters of banking operations within which the country”s banking and financial system functions for- A) maintaining public confidence in the system, B) protecting depositors’ interest ; C) providing cost-effective banking services to the general public.

♦ Regulator and supervisor of the payment systems: A) Authorises setting up of payment systems; B) Lays down standards for working of the payment system; C)lays down policies for encouraging the movement from paper-based payment systems to electronic modes of payments. D) Setting up of the regulatory framework of newer payment methods. E) Enhancement of customer convenience in payment systems. F) Improving security and efficiency in modes of payment.

♦ Manager of Foreign Exchange: RBI manages forex under the FEMA- Foreign Exchange Management Act, 1999.  in order to A) facilitate external trade and payment B) promote the development of foreign exchange market in India.

Issuer of currency: RBI issues and exchanges currency as well as destroys currency & coins not fit for circulation to ensure that the public has an adequate quantity of supplies of currency notes and in good quality.

♦ 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.

Banker to the Government: performs merchant banking function for the central and the state governments; also acts as their banker.

♦ Banker to banks: An important role and function of RBI is to maintain the banking accounts of all scheduled banks and acts as the banker of last resort.

An agent of Government of India in the IMF

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Offices and Training Centres:

  1. RBI has 20 regional offices, most of them in state capitals and 11 Sub-offices. So, the RBI has its offices at 31 locations.
  2. Has five training establishments – Two, College of Agricultural Banking and Reserve Bank of India Staff College are part of the Reserve Bank. Other three are autonomous, National Institute for Bank Management;  Indira Gandhi Institute for Development Research (IGIDR);  Institute for Development and Research in Banking Technology (IDRBT).

 

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