INTRODUCTION

The Reserve Bank of India (RBI, Hindi: ) is India's central banking institution,
which controls the monetary policy of the Indian rupee. It commenced its operations on 1 April
1935 during the British Rule in accordance with the provisions of the Reserve Bank of India Act,
1934.[5] The original share capital was divided into shares of 100 each fully paid, which were
initially owned entirely by private shareholders.[6] Following India's independence on 15 August
1947, the RBI was nationalised on 1 January 1949.
The RBI plays an important part in the Development Strategy of the Government of India. It is a
member bank of the Asian Clearing Union. The general superintendence and direction of the RBI
is entrusted with the 21-member Central Board of Directors: the Governor, 4 Deputy Governors,
2 Finance Ministry representatives, 10 government-nominated directors to represent important
elements from India's economy, and 4 directors to represent local boards headquartered at
Mumbai, Kolkata, Chennai and New Delhi. Each of these local boards consists of 5 members
who represent regional interests, and the interests of co-operative and indigenous banks.
The bank is also active in promoting financial inclusion policy and is a leading member of
the Alliance for Financial Inclusion (AFI).
The Reserve Bank of India has four zonal offices at Chennai, Delhi, Kolkata and Mumbai.[33] It has
19 regional offices and 10 sub-offices. Regional offices are located
in Ahmedabad, Bangalore, Bhopal,Bhubaneswar, Chandigarh, Chennai, Delhi, Guwahati, Hyder
abad, Jaipur, Jammu, Kanpur, Kochi, Kolkata, Lucknow, Mumbai, Nagpur, Patna and Thiruvanan
thapuram. It also has 9 sub-offices located
in Agartala,Dehradun, Gangtok, Panaji, Raipur, Ranchi, Shillong, Shimla and Srinagar. Recently
the RBI has opened two more sub-office at Aizawal and Imphal.[34]
The Reserve Bank of India has four regional representations: North in New Delhi, South in
Chennai, East in Kolkata and West in Mumbai. The representations are formed by five members,
appointed for four years by the central government and servebeside the advice of the Central
Board of Directorsas a forum for regional banks and to deal with delegated tasks from the
central board.[35]
The bank has also two training colleges for its officers, viz. Reserve Bank Staff
College, Chennai and College of Agricultural Banking, Pune. There are three autonomous
institutions run by RBI namely National Institute of Bank Management (NIBM), Indira Gandhi
Institute for Development Research (IGIDR), Institute for Development and Research in Banking
Technology (IDRBT).[36] There are also four Zonal Training
Centres at Mumbai, Chennai, Kolkata and New Delhi.

The Board of Financial Supervision (BFS), formed in November 1994, serves as a CCBD
committee to control the financial institutions. It has four members, appointed for two years, and
takes measures to strength the role of statutory auditors in the financial sector, external
monitoring and internal controlling systems.

OBJECTIVES

* To manage the monetary and credit system of the country.

* To stabilizes internal and external value of rupee.
* For balanced and systematic development of banking in the
country.
* For the development of organized money market in the country.
* For proper arrangement of agriculture finance.
* For proper arrangement of industrial finance.
* For proper management of public debts.
* To establish monetary relations with other countries of the world
and international financial institutions.
* For centralization of cash reserves of commercial banks.
* To maintain balance between the demand and supply of currency.
* To manage the monetary and credit system of the country.
* To stabilizes internal and external value of rupee.
* For balanced and systematic development of banking in the
country.
* For the development of organized money market in the country.
* For proper arrangement of agriculture finance.
* For proper arrangement of industrial finance.
* For proper management of public debts.
* To establish monetary relations with other countries of the world
and international financial institutions.
* For centralization of cash reserves of commercial banks.
* To maintain balance between the demand and supply of currency.
NEED AND IMPORTANCE:

The Reserve Bank of India (RBI) is Indias central bank and is wholly
owned by the Government of India. Established on April 1, 1935, the
RBIs Central Office is located in Indias commercial capital of
Mumbai. (Interested in India's rapidly growing economy? ReadIndia
Is Eclipsing China As Bric's Brightest Star.)
Oversight of the RBI is provided by the Central Board of Directors,
which includes the banks Governor, a maximum of four Deputy
Governors, and a few Directors of relevant local boards. The Central
Board delegates specific functions through its committees and subcommittees such as the Committee of Central Board, which
oversees current business of the central bank; the Board for
Financial Supervision, which regulates and supervises commercial
banks, finance companies and financial institutions; and the Board
for Payment and Settlement Systems.
The Governor of the RBI is its chief executive. The current Governor
of the RBI is Raghuram Rajan, who assumed the office in September
2013 as the banks 23rd Governor. Rajan was the chief economist
and director of research at the International Monetary Fund from
2003 to 2006.
The main functions of the RBI include
Monetary Authority: The RBI formulates, implements and
monitors Indias monetary policy, the main objectives of which
are maintaining price stability, ensuring adequate flow of credit
to productive sectors, and financial stability.
Issuer of Currency: Issues currency and coins, and exchanges
or destroys currency notes and coins that are not fit for
circulation.
Banker and Debt Manager to Government of India: Performs
merchant banking functions for central and state governments,
and also acts as their banker. Also determines how best to
raise money in debt markets to help the government finance
its requirements.

 Banker to Banks: Enables clearing and settlement of inter-bank

transactions, maintains banks accounts for statutory reserve
requirements, and acts as lender of last resort.
PRESENTATION

The data presented in balance sheet and profit & loss accounts
sections can be extracted in any units of reporting, viz., Rs.
thousand, Rs. lakh, Rs. crore and Rs. million, as per the choice of the
user. Except two ratios, viz., business per employee and profit per
employee, all other ratios are in per cent. Business per employee
and profit per employee are in Rs. lakh (Unit 1 lakh = 100000).

Commercial Banks which conduct the business of banking in

India and which (a) have paid up capital and reserves of an
aggregate real and exchangeable value of not less than Rs.5 lakhs
and (b) satisfy the Reserve Bank of India that their affairs are not
being conducted in a manner detrimental to the interest of their
depositors, are eligible for inclusion in the Second Schedule to the
Reserve Bank of India Act, 1934, and when included are known as
"Scheduled Commercial Banks".

Scheduled Commercial Banks in India are categorised in five

different groups according to their ownership and/or nature of
operation. These bank groups are: (i) State Bank of India and its
associates, (ii) Nationalised Banks, (iii) Regional Rural Banks, (iv)
Foreign Banks and (v) Other Indian Scheduled Commercial Banks (in
the private sector). The site provides facility of aggregating data for
various bank-groups.

The "total expenses" shown in profit & loss account is the sum
of "interest expenses" and "operating expenses". The "profit" figure
is computed by subtracting "total expenses" and "provisions and
contingencies" from "total income" of the bank.

The format of balance sheet and profit & loss accounts for the
years 1989-90 and 1990-91 was different from the one effective
from 1991-92. Accordingly, several details are not available for the
above two years and a few adjustments in data have been made to
maintain uniformity of presentation. The details in this regard for
these two years are given below:
Balance Sheet

The sum of constituent items under liabilities/assets may not

tally with total liabilities/assets as the "total" also includes the contra
items.

Barring capital reserve, details of reserve and surplus are not

available.

Deposits of branches "in India" and "outside India" are not

available separately. Therefore, only total deposits are reported.

Further details of "borrowings in India" as "borrowing from

RBI", "borrowing from other banks" and "borrowing from other
institutions/agencies" are not available.

Under "other liabilities and provisions", details of "inter-office

adjustments", "interest accrued" under "other liabilities" are not
available separately. These items have been included under
"others".

Conclusion
The current CPI measure of inflation does not properly reflect the
impact of inflation since it fails to take account of the different
spending patterns of different income groups. In addition, it ignores
mortgage repayments which, whilst relatively low at present, are a
major part of household spending. The Real Britain Index attempts
to correct for that by providing a measure of inflation for each
income decile in the population, from poorest to richest.
Using RBI as a measure shows that the experience of inflation for
different income groups can vary pretty significantly from the official
measure. In particular, poorer households will in general suffer a
high rate of inflation than richer; and households in general will
experience a higher rate, as CPI misses the substantial expenditure
of mortgage payments. In a period of low inflation, as now, the
differences both between income groups, and between the official
and unofficial inflation measures, may not be especially great. But
over time, these differences stack up, and in any case attempting to
set pay increases based on the official CPI inflation measure will lead
to a persistent decline in real living standards. Worse, this hidden
decline will be more significant the poorer the individual or the
household. As a matter of simple justice, pay awards for the lower

paid should aim above the official rate of inflation, simply in order to
correct for this in-built bias.

A Opinion & suggestion for RBI

This refers to Abheek Barua's article "Raghuram Rajan's arithmetic" (April 25). The
contention of the central bank that it has no view on exchange rates and fair value for
the rupee sounds like an enigma. How then does it determine the timing, direction (buy
or sell) and volume of intervention in the forex market, be it for the professed purpose of
smoothening the volatility spikes? The central bank is also silent as to the volatility
index/metric it might be tracking for the purpose. We find that the Reserve Bank of India
(RBI) has been intervening through the spot, forward and swap forex market. While
taking positions in forward/swap deals for intervention or sterilisation purpose, the RBI is
implicitly

taking

view

on

the

future

value

of

the

currency.

While it is not necessary for the central bank to fully disclose the policies, strategies,
tools and weapons in its armour, through an appropriate communication strategy and
signals, it can enable the economic agents to anchor exchange rate expectation, so that
it dampens to some extent, the volatility amplitude of the exchange rates vis--vis the
major trade currencies. This would perhaps make the RBI's job of exchange rate
management more orderly and less onerous in the emerging era of fuller capital account
convertibility.

Forget the common man, even market economists and investors suffered
uncertainty about the immediate interpretation of the key message of the recent
quarterly policy announcement by Reserve Bank of India.
Indeed, it took the usual post-policy media comments and interviews by the governor
and the deputy governor to better explain the RBI's intention.
The RBI deserves credit for more frequent communication with financial markets.
The move toward quarterly economic assessments and policy announcements are
steps toward the right direction. However, the art of written central bank
communication is a new experience for the RBI, so it is understandable if there is a
bit of learning by doing. A few suggestions to improve the communication:
Standalone, shorter monetary policy statement: The current statements are
way too long (the latest one was 71 pages), possibly because they attempt to cover too
many things, from monetary policy measures to financial development initiatives.

There is a pressing need for a standalone monetary policy statement; non-monetary

policy measures can be issued as a separate statement.
Single policy interest rate: The monetary policy statement should focus on a
single policy interest rate (in India's case, the reverse repo rate). By giving
importance of a potential monetary signal in the repo rate and the bank rate, the RBI
only causes confusion.
The bank rate is practically dead, while the repo rate is not the operational monetary
policy rate. The cash reserve ratio's usage is so infrequent now that it does not
warrant a mention in every quarterly statement. All other central banks are able to
use a single interest rate for communicating with markets.
Continuity in policy statements: The clarity in communication that came across
in the media comments by the governor and deputy governor was conspicuous by its
absence in the policy statement. Separately, there appears to be a mismatch between
the concern about the inflation outlook expressed in recent statements, the guidance
offered, and the actual monetary action.
The bottom line is that monetary policy statements should be viewed as a tapestry of
economic assessments and the evolving risks to the outlook for growth and inflation,
especially when compared to the prior statements.

Reference
http://www.investopedia.com/articles/investing/112614/increasi
ng-importance-reserve-bank-india.asp

https://en.wikipedia.org/wiki/Reserve_Bank_of_India

http://www.educationobserver.com/forum/showthread.php?
tid=4607
http://www.yourarticlelibrary.com/banking/fundamentalobjectives-of-the-reserve-bank-of-india/26348/