RESERVE BANK OF INDIA
Introduction:
- It is the apex institution of the country's monetary system and financial system.
- It plays a leading role in organising, running, supervising, regulating and developing the monetary and financial system. The design and conduct of the monetary and credit policy are its special responsibility.- It was established on April 1, 1935 under the Reserve Bank of India Act 1934.
- Initially, it was constituted as a private shareholders' bank with a fully paid- up share capital of Rs 5 crores.
- It was nationalised on January 1, 1949.
- The executive head of the Bank is called the Governor who is assisted by deputy governors and other officers.
- It has a central board of directors, supplemented by four local boards at Delhi, Kolkata, Chennai and Mumbai for four regional areas: northern, eastern, southern and western respectively.
- Its head office is at Mumbai.
FUNCTIONS OF RBI
-As currency authority
The RBI is the sole authority for the issue of currency other than one-rupee notes and coins and small coins which are issued by Government of India.
There are two separate departments: the Issue Department and the Banking Department.
-As Banker to Government (Centre as well as states)
It transacts all banking business of the government. In return, the governments keep their cash balances on current account deposit with the RBI. It provides short term credit to the government. The Central government is empowered to borrow through treasury bills any amount it likes from the RBI. Thus the Central government is the ultimate monetary authority of the country.
- As banker's bank and supervisor
The RBI holds a part of the cash reserves of banks, lends them funds for short periods, and provides them with centralised clearing and cheap and quick remittance facilities. The RBI is authorised statutorily to require scheduled commercial banks to deposit with it a stipulated ratio (lying between - 3% and 15%) of their net total liabilities. The ratio is called Cash Reserve Ratio (CRR).
-As Controller of money supply and credit
RBI is responsible for keeping inflationary tendencies under check through controlling the money supply and bank credit.
To perform the above function, following instruments are at the disposal of RBI: Open market operations
The term open market operation's stands for the purchase and sale of government securities by the RBI from/to the public and banks on its own account. In its capacity as the government's banker and as the manager of public debt, the RBI buys all the unsold stock of new government loans at the end of the subscription period and thereafter keeps them on sale in the market on its own account.
Introduction:
- It is the apex institution of the country's monetary system and financial system.
- It plays a leading role in organising, running, supervising, regulating and developing the monetary and financial system. The design and conduct of the monetary and credit policy are its special responsibility.- It was established on April 1, 1935 under the Reserve Bank of India Act 1934.
- Initially, it was constituted as a private shareholders' bank with a fully paid- up share capital of Rs 5 crores.
- It was nationalised on January 1, 1949.
- The executive head of the Bank is called the Governor who is assisted by deputy governors and other officers.
- It has a central board of directors, supplemented by four local boards at Delhi, Kolkata, Chennai and Mumbai for four regional areas: northern, eastern, southern and western respectively.
- Its head office is at Mumbai.
FUNCTIONS OF RBI
-As currency authority
The RBI is the sole authority for the issue of currency other than one-rupee notes and coins and small coins which are issued by Government of India.
There are two separate departments: the Issue Department and the Banking Department.
-As Banker to Government (Centre as well as states)
It transacts all banking business of the government. In return, the governments keep their cash balances on current account deposit with the RBI. It provides short term credit to the government. The Central government is empowered to borrow through treasury bills any amount it likes from the RBI. Thus the Central government is the ultimate monetary authority of the country.
- As banker's bank and supervisor
The RBI holds a part of the cash reserves of banks, lends them funds for short periods, and provides them with centralised clearing and cheap and quick remittance facilities. The RBI is authorised statutorily to require scheduled commercial banks to deposit with it a stipulated ratio (lying between - 3% and 15%) of their net total liabilities. The ratio is called Cash Reserve Ratio (CRR).
-As Controller of money supply and credit
RBI is responsible for keeping inflationary tendencies under check through controlling the money supply and bank credit.
To perform the above function, following instruments are at the disposal of RBI: Open market operations
The term open market operation's stands for the purchase and sale of government securities by the RBI from/to the public and banks on its own account. In its capacity as the government's banker and as the manager of public debt, the RBI buys all the unsold stock of new government loans at the end of the subscription period and thereafter keeps them on sale in the market on its own account.
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