Indian Banking System

The reserve bank of India (RBI) was established on 1st April, 1935. It is alled as the
s!pre"e "onetar# a!thorit# or the entral bankin$ a!thorit#.
Basic function of RBI
Basi f!ntion of RBI is to re$!late the iss!e of bank notes and keepin$ of reserves with
a view to se!rin$ "onetar# stabilit# in India. In si"ple ter"% RBI is aware of operatin$
the !rren# and redit s#ste" of the o!ntr# to its advanta$e.
All the f!ntions of RBI (Reserve bank of India) is ontrolled b# B&'(Board for finanial
s!pervision) , set !p in (ove"ber 199). The "ain p!rpose of B&' is to oversee the
Indian finanial s#ste", o"prisin$ o""erial banks, state o*operative banks, All
India finanial instit!tion (AI&I) and non*bankin$ finane o"panies ((&&+s).
1.1
1.1, Indian bankin$ '#ste"
1.-
1.-, .istrib!tion of branh
Main functions of RBI:
Monetary authority: /versee the "onetar# poli#. 0ses its "onetar# poli# to
ontrols inflationar# and deflationar# sit!ations in the eono"#.
RBI acts as regulator and supervisor of financial system: 1rovide wide
f!ntions to develop a so!nd bankin$ s#ste" in the o!ntr#. 1rotetin$ interest of
depositors and providin$ ost effetive bankin$ servies to the p!bli.
Foreign exchange control: 2aintain the stabilit# of the e3ternal val!e of the
national !rren#*Indian r!pee. Re$!late the forei$n e3han$e "arket in the
o!ntr# in ter"s of the forei$n e3han$e re$!lation at (&4RA), 19)5.
Currency issuance: Iss!es !rren# notes and oins and p!t the" into ir!lation
with e3han$in$ the" or destro#in$ the" to $ive the p!bli ade6!ate s!ppl#.
Governments !anker: RBI ats as the banker to the entral and state
$overn"ent b# providin$ the" bankin$ servies of deposits, withdrawal and
transfer of f!nds and "ana$es p!bli deposits.
Banker to !anks: RBI "aintains ao!nts of all shed!led (Appearin$ in the
seond shed!le of the RBI At) bank.
"ools of monetary control:
Cash reserve ratio #CRR$: +ash reserve ratio is the ash that all 'hed!led and non*
shed!led banks are re6!ired to "aintain with RBI as a ertain perenta$e of their
!sto"er deposits and notes or their de"and and ti"e liabilities (.T7).
The raw ash of those banks are stored in a ash va!lt or in for" of deposits to entral
bankin$ a!thorit#.
A !t in +RR will brin$ down the all rates. An inrease in +RR inreases the all rate.
Statutory li%uidity ratio #S&R$: 'tat!tor# li6!idit# ratio refers to the "one# that all the
shed!led and non*shed!led banks are re6!ired to "aintain in for" of ash in hand,
$old or $overn"ent approved se!rities (Bond and shares of o"panies) before providin$
an# redit to the !sto"ers.
Three ob8etives of '7R are% Restrits e3pansion of banks redit, Inrease invest"ent of
banks in approved se!rities, and 4ns!re solven# of banks.
Bank rate: Bank rate is the rate of interest that the entral bankin$ a!thorit# (RBI)
har$es to all o""erial banks and other finanial instit!tion on loanable reso!res and
advanes.
9 1. :hat will happen if there is an inrease in +ash Reserve Ratio (+RR);
A. Their will be a derease in lendable reso!res
9 -. :h# Reserve Bank of India (RBI) also known as lender of last resort;
A. As RBI is also known as Banker of Banks, it provides e"er$en# advanes to the
banks d!rin$ the ti"e of risis.
9 3. :henever a bank ret!rns a he6!e !npaid, then what that he6!e is alled;
A. .ishono!r +he6!e
9 ). :hih is the third lar$est p!bli setor bank of India;
A. 1!n8ab (ational Bank (1(B), whereas Bank of Broda stood -
nd
and 'BI on 1
st

position.
9 5. :hat does A'BA stands for;
A. Appliation '!pported b# Bloked A"o!nt
9 <. In whih #ear RBI anno!ned Bankin$ /"b!ds"an she"e;
A. 1995
9 5. :hat is the perenta$e of &orei$n .iret Invest"ent (&.I) in private setor banks;
A. 5)=
9 >. ?ow "an# diretors are assoiated with reserve Bank of India;
A. &ifteen
Advertise"ent
9 9. :hih poli# is adopted b# RBI d!rin$ Inflation;
A. .ear 2one# 1oli#
9 1@. :hat is the "ain f!ntion of :orld Bank;
A. To pro"ote the $rowth of international trade
9 11. :hih ne$otiable instr!"ents an be rossed to banks;
A. Bill of 43han$e
9 1-. :hih at is assoiated with proble" of (on 1erfor"in$ Assets;
A. Bankin$ Re$!lation At, 19)9
9 13. 'avin$s ao!nt is also known as;
A. +o""on "an ao!nt
9 1). :hat are linked ao!nts;
A. Ao!nts whih are linked to$ether within a sa"e bank fir transferrin$ "one#
eletroniall#.
9 15. :h# bankin$ o"b!ds"an she"e la!nhed;
A. The she"e was anno!ned to resolve !sto"er o"plaints with the servies of banks.
9 1<. :h# AB+ is la!nhed b# RBI;
A. RBI anno!ned Anow Bo!r +!sto"er (AB+) to ens!re the orret identit# of the
!sto"er.
9 15. Coods and 'ervies Ta3 wo!ld replae whih ta3;
A. Dal!e Added Ta3
9 1>. :hat does &RB2 stands for;
A. &isal Responsibilit# and B!d$et 2ana$e"ent