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INTRODUCTION
The Reserve Bank of India 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. The original share capital was divided into shares of 100
each fully paid, which were initially owned entirely by private
shareholders. 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).
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FUNCTIONS
Financial Supervision
The Reserve in November 1994 as a committee of the Central Board of Directors
of the Reserve Bank of India. Primary objective of BFS is to undertake
consolidated supervision of the financial sector comprising commercial banks,
financial institutions and non-banking finance companies.
The Board is constituted by co-opting four Directors from the Central Board as
members for a term of two years and is chaired by the Governor. The Deputy
Governors of the Reserve Bank are ex-officio members. One Deputy Governor,
usually, the Deputy Governor in charge of banking regulation and supervision, is
nominated as the Vice-Chairman of the Board. The Board is required to meet
normally once every month. It considers inspection reports and other supervisory
issues placed before it by the supervisory departments.
BFS through the Audit Sub-Committee also aims at upgrading the quality of the
statutory audit and internal audit functions in banks and financial institutions. The
audit sub-committee includes Deputy Governor as the chairman and two Directors
of the Central Board as members. The BFS oversees the functioning of Department
of Banking Supervision (DBS), Department of Non-Banking Supervision (DNBS)
and Financial Institutions Division (FID) and gives directions on the regulatory and
supervisory issues.
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Issue 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
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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. RBI maintains the economic structure of the country so that it can
achieve the objective of price stability as well as economic development, because
both objectives are diverse in themselves. For printing of notes, the Security
Printing and Minting Corporation of India Limited (SPMCIL), a wholly owned
company of the Government of India, has set up printing presses at Nashik,
Maharashtra and Dewas, Madhya Pradesh. The Bharatiya Reserve Bank Note
Mudran Private Limited (BRBNMPL), a wholly owned subsidiary of the Reserve
Bank, also has set up printing presses at Mysuru in Karnataka and Salboni in West
Bengal. In all, there are four printing presses. And for minting of notes, SPMCIL
has four mints at Mumbai, Noida (UP), Kolkata and Hyderabad for coin
production. While coins are minted by GoI, the RBI works as an agent of GoI for
distributing and handling of coins. RBI also works to prevent counterfeiting of
currency by regularly upgrading security features of currency. For printing
currency, RBI has four facilities at Dewas, Nasik,Mysore and Salboni. The RBI is
authorized to issue notes up to value of Rupees ten thousand
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Banker's bank
RBI also works as a central bank where commercial banks are account holders and
can deposit money. RBI maintains banking accounts of all scheduled
banks. Commercial banks create credit. It is the duty of the RBI to control the
credit through the CRR, bank rate and open market operations. As banker's bank,
the RBI facilitates the clearing of cheques between the commercial banks and
helps inter-bank transfer of funds. It can grant financial accommodation to
schedule banks. It acts as the lender of the last resort by providing emergency
advances to the banks. It supervises the functioning of the commercial banks and
take action against it if need arises. The RBI also advices the banks on various
matters for example Corporate Social Responsibility
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Major Functions:
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d. Acting as a nodal department for the Banking Codes and Standards Board of
India (BCSBI)
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regulatory oversight of select All India Financial institutions, such as, Exim
Bank, Industrial Investment Bank of India (IIBI), National Bank for Agriculture
and Rural Development (NABARD), National Housing Bank (NHB) and Small
Industries Development Bank of India (SIDBI) and administration of the Credit
Information (Regulation) Act, 2005 and regulation of credit information
companies.
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Department of Communication
Communication Policy
In 2008, the Reserve Bank of India for the first time, elaborated its communication
policy which was placed on the RBI website with the approval of the Reserve
Bank's Central Board of Directors.
Dissemination
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The varied publications of the Reserve Bank are the mainstay of the Reserve
Banks dissemination policy. Apart from the publications, speeches of the
Governor and Deputy Governors provide rationale and explanations behind the
policy decisions. Informal discussions with financial editors are also arranged
every two months to keep open an informal channel of communication between the
media and the Reserve Bank.
d. Emails;
f. Brochures/pamphlets;
g. Website;
h. Advertisements;
i. Periodicals.
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Feedback
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Functions:
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The Reserve Bank has entered into memorandum of understanding (MOU) with
Central Government and various State Governments for harmonisation of
regulation and supervision.
The Reserve Bank of India prescribes prudential norms for capital adequacy,
income recognition, asset classification and provisioning, loans and advances,
investments and liquidity requirements. Further, guidelines have also been given to
UCBs in respect of single/group exposure norms and sectoral exposures. UCBs are
required, by virtue of the provisions of section 35 A of the Banking Regulation Act,
1949 (As Applicable to Co-operative Societies), to comply with these directions.
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DCBS is broadly given the mandate of on-site and off-site supervision through its
various Regional Offices. They monitor compliance of UCBs with the
guidelines/directives issued by the Reserve Bank. The on-site supervision is carried
UCBs file a set of statutory/other returns with the Reserve Bank through a
dedicated software package, Off-site Surveillance System. These returns help the
Reserve Bank in off-site monitoring of the financial position of banks.
Based on the current assessment of the financial position of a UCB, the department
initiates supervisory actions, if need be, by advising the individual UCB of the
specific action under Supervisory Action Framework proposed to be taken and the
corrective action it needs to take to improve the financial position.
The Reserve Bank also issues directions and operational instructions to UCBs,
wherever necessary to streamline the functioning of these banks and to protect the
interests of the depositors. Powers have also been vested with the Reserve Bank
under section 47 of the Banking Regulation Act, 1949 for imposition of penalty.
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The Reserve Bank has also entered into Memorandum of Understanding with State
Governments, Union Territories and Central Government (for multi-state UCBs) to
set up a Task Force on Urban Co-operative Banks (TAFCUB) in each State/UT to
identify and draw up a time-bound action plan for the revival of potentially viable
UCBs and non-disruptive exit for non-viable UCBs.
The Regional Offices of the Reserve Bank act as focal points for monitoring
upgradation of skill for the staff of co-operative banks, improvements in their
training programmes and linking and integrating them with the country's banking
system.
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Providing other support services, such as, framing guidelines for award of
contracts/floatation of tenders for printing, pricing, sales and distribution of
publications and centralised procurement/arrangement of various stationery items,
courier services, etc.
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It also organises two lectures in the memory of two of its past Governors,
namely, Shri C.D. Deshmukh and Shri L.K. Jha.
Functions
Investment and management of the foreign currency and gold assets of the
Reserve Bank of India,
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The Department of Government and Bank Accounts (DGBA) discharges the core
central banking function of acting as banker to the government and banker to
banks.
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Carries out day to day operations by agency bank branches (authorised for
this purpose) and Banking Departments at Regional Offices.
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Functions:
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Functions:
1. To ensure compliance with the provisions of the Reserve Bank of India Act,
1934 relating to NBFCs, Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 and Factoring Regulation Act, 2011.
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Functions
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The department has four Regional Offices at Chennai, Kolkata, Mumbai and New
Delhi.
The Board for Regulation and Supervision of Payment and Settlement Systems
(BPSS) prescribes policies relating to the regulation and supervision of all types of
payment and settlement systems. The BPSS also provides guidance on setting
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standards for existing as well as future payment systems, authorising the payment
and settlement systems/operators, determine criteria for membership to these
systems, including continuation, termination and rejection of membership. BPSS
meets once every quarter.
The payment and settlement systems in India are regulated under the
Payment and Settlement Systems Act, 2007 (PSS Act). The PSS Act as well as the
Payment and Settlement System Regulations, 2008 framed under the Act came into
effect from August 12, 2008. In terms of the PSS -Act, no person other than the
Reserve Bank
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Planning, designing and organising quick sample surveys regularly for area
of interest to the Reserve Bank.
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Current Focus
Bringing out Reserve Banks data publications directly from the data
warehouse.
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To ensure that priority sector lending becomes a tool for banks to capture
untapped business opportunities among financially excluded sections of the society
To help expand Prime Ministers Jan Dhan Yojana (PMJDY) and to make it
a sustainable and scalable financial inclusion initiative through financial literacy
To step up credit flow to MSME sector and to rehabilitate sick units through
timely credit support
Carved out of the Financial Markets Department in November 2014, the Financial
Markets Operation Department (FMOD) has been entrusted with the responsibility
of carrying out market operations towards implementing the Reserve Banks
monetary policy objectives. The Department, on behalf of the Reserve Bank,
conducts operations in the money, government securities and forex markets. As a
part of this responsibility, the FMOD also undertakes analysis of various market
segments and provides inputs to the top management for informed decision
making.
The specific functions of FMOD include:
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In addition, the FMOD also attends to policy issues relating to various segments of
financial markets, fixation of Intra-Day Limits (IDL) limits for operation of Real
Time Gross Settlement Accounts and attending to references received from other
departments of the Reserve Bank, international and other regulatory organisations.
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Keeping in view both international and domestic initiatives for resolving financial
crisis and strengthening international financial architecture, the Financial Stability
Unit (FSU) was set up in July 2009. The main functions of FSU are:
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The Foreign Exchange Regulation Act, 1973 (FERA) was repealed and a new Act
called the Foreign Exchange Management Act, 1999 (FEMA) came into force with
effect from June 1, 2000. The objective of the new dispensation is to facilitate
external trade and payments and promote orderly development and smooth conduct
of foreign exchange market in India.
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Since the procedures have been simplified and powers have been delegated to the
Authorised Persons under the FEMA, 1999, the role of the Foreign Exchange
Department is minimum so far as individual citizens are concerned. Persons
resident in India have to simply approach the Authorised Persons for their foreign
exchange needs. Guided by the Current Account Rules notified, from time to time
by the Government of India and Capital Account Regulations notified by the
Reserve Bank, the Authorised Persons will facilitate foreign exchange transactions
of individuals. The Reserve Bank processes only those applications which require
its prior approval under Foreign Exchange Management (Current Account
Transactions) Rules and (Capital Account Transactions) Regulations.
In keeping with the spirit of the FEMA, the Government of India has empowered
the Reserve Bank under section 15 of the Act to compound the contraventions of
all sections of FEMA, 1999 except section 3(a) of the Act. Under compounding the
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i. Recruitment
ii. Placement
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x. Deputation/Secondment/Tour of duty
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Inspection Department
Inspection Department was set up in 1935 when the Reserve Bank of India
commenced its operations. The Department is tasked with the mandate of
providing an independent and objective assurance/feedback on the
operations/working of the offices of the Reserve Bank. It examines/evaluates and
reports on the adequacy and reliability of the Reserve Bank's risk management,
internal controls and governance process.
The Inspection Department is the Secretariat and also reports its assessments to the
Audit and Risk Management Sub-Committee (ARMS) of the Central Board of the
Reserve Bank. Additionally, it places the findings of Information Systems (IS)
audits before the Information Technology Sub Committee (ITSC) of the Board.
Audit observations which have been classified as High Risk are also placed before
the Executive Directors Committee (EDC) for their review and guidance. The
Internal Audit function constitutes a key dimension in the Reserve Bank's
governance architecture.
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Under the Risk Based Internal Audit (RBIA), the Inspection Department provides
independent and objective opinion to the management on whether or not the
Reserve Bank's business processes and risks are being properly managed. The
RBIA reviews the outcomes of all other audits. Audit of various business units
Central Office Departments (CODs), Regional Offices (ROs), Training
Establishments (TEs), Banking Ombudsman Offices (BO) and Associate
Institutions (AIs) are taken up at different periodicities ranging from 12 to 24
months.
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Information Security (IS) audit is carried out as part of the RBIA framework to
evaluate risk control measures in Information Systems used in the Reserve Bank.
The Department also carries out technology audit of computer
applications/systems, technology platforms, services, etc. These are carried out
either at the directions of Central Board/Audit and Risk Management Sub-
Committee (ARMS)/Information Technology Sub-Committee (ITSC)/Top
Management or on receipt of request from the Business Owner Departments/User
Departments/Department of Information Technology (DIT) or as felt necessary by
the Department considering the criticality/importance of operations/systems.
As a part of internal control mechanism, all the business units are required to get
their transactions (mainly financial transactions) audited by external chartered
accountant firms, concurrently with the occurrence of such transactions.
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gaps. The assessments are carried out by persons unconnected with the
operations/process being assessed. All business units are required to conduct
CSAA at least twice in a year, that is, for the half-year ended June and December
every year.
Inspection Department follows up on the audit observations (RBIA, ISA/ TA, CA,
CSAA) to ensure that prompt corrective actions or risk mitigating counter-
measures are instituted. The Department undertakes off-site monitoring as well as
on-site evaluation, wherever necessary. Off-site monitoring is undertaken by
obtaining periodical returns from business units, analysing them and initiating
follow-up as deemed appropriate.
The Department co-ordinates and arranges periodical meetings of Audit & Risk
Management Sub Committee (ARMS) and Executive Directors' Committee (EDC).
The meetings of ARMS and EDs' Committee are conducted approximately once in
three months. On half yearly basis, the Department reports to Information
Technology Sub-Committee (ITSC) of the Board on Information Systems
(including Security) audits undertaken by the Department.
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To interface with the Government securities market for purchasing securities from
the secondary market for investment purposes by State Governments under
schemes like CSF & GRF and on behalf of foreign central banks. It also monitors
movement of yields of Government securities, among other things, and provides
necessary feedback to Top Management. It carries out monthly and quarterly
analysis of the Government Securities - Secondary market.
To enter into agreements with PDs, monitor and review their performance with
regard to underwriting and bidding commitments in primary markets, conduct
underwriting auctions and supervise standalone PDs.
(iv) Research:
To provide policy, analytical and technical inputs for various committees and
conferences including State Finance Secretaries conference. To also act as the focal
point for answering parliamentary questions, queries of the Central Board and
Committee of Central Board of the Reserve Bank, research contributions to the
Reserve Banks, Government of Indias and other publications.
To monitor the data pertaining to Government cash balances, maintains the MIS
for the Top Management, provide data for various statutory and internal
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International Department
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Legal Department
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Functions
According to the Reserve Bank of India Act, 1934, ...it is expedient to constitute a
Reserve Bank of India to regulate the issue of Bank notes and the 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".
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The broad objectives of monetary policy are derived from the Reserve Bank
of India Act. The agreement on Monetary Policy Framework between the
Government and the Reserve Bank of India dated February 20, 2015 states that
the objective of monetary policy is to primarily maintain price stability, while
keeping in mind the objective of growth. The relative emphasis placed on price
stability and economic growth is modulated according to the circumstances
prevailing at a particular point in time and is spelt out, from time to time, in the
policy statements of the Reserve Bank. In the recent period, considerations of
financial stability have assumed an added importance in view of increasing
openness of the Indian economy.
As per the agreement, the Governor, and in his absence the Deputy Governor
in charge of monetary policy, shall determine the policy rate, as well as any other
monetary measures, to achieve the inflation target.
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Main Functions
The policy statements are bi-monthly since April 1, 2014, i.e., six times in a
year. Off-cycle monetary policy actions can also be undertaken depending on the
evolving macro-financial conditions.
Main Activities
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Premises Department
The Risk Monitoring Department (RMD) has been constituted for implementation
of Enterprise-wide Risk Management System in the Reserve Bank. The department
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has two divisions looking after operational risks and financial risks. For effective
identification, assessment and management of risks uniformly throughout the
Reserve Bank, RMD has been mandated:
To assess and report the financial risks arising out of the Reserve Banks
policy actions to the RMC and ARMS.
Secretary's Department
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Secretarial work connected with the meetings of the Central Board and its
Committee;
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