WEEKLY PROJECT REPORT-1

Faculty Guide: Submitted by:

Prof Rakhi Shrivastava Ajay Saxena
ITM Business School, PGDM - 145
Navi Mumbai Batch - C
 Reserve Bank Of India

Establishment

The Reserve Bank of India was established on April 1, 1935 in accordance with the
provisions of the Reserve Bank of India Act, 1934.
The Central Office of the Reserve Bank was initially established in Calcutta but was
permanently moved to Mumbai in 1937. The Central Office is where the Governor sits
and where policies are formulated.
Though originally privately owned, since nationalisation in 1949, the Reserve Bank is
fully owned by the Government of India.

Preamble
The Preamble of the Reserve Bank of India describes the basic functions of the Reserve
Bank as:

"...to regulate the issue of Bank Notes and 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."

Central Board

The Reserve Bank's affairs are governed by a central board of directors. The board is
appointed by the Government of India in keeping with the Reserve Bank of India Act.
Appointed/nominated for a period of four years

Functions : General superintendence and direction of the Bank's affairs

Financial Supervision

The Reserve Bank of India performs this function under the guidance of the Board for
Financial Supervision (BFS). The Board was constituted in November 1994 as a
committee of the Central Board of Directors of the Reserve Bank of India.
Main Functions of Reserve Bank of India:

Monetary Authority:

Formulates, implements and monitors the monetary policy.

Objective: maintaining price stability and ensuring adequate flow of credit to productive
sectors.

Regulator and supervisor of the financial system:

Prescribes broad parameters of banking operations within which the country's banking
and financial system functions.
Objective: maintain public confidence in the system, protect depositors' interest and
provide cost-effective banking services to the public.

Manager of Foreign Exchange

Manages the Foreign Exchange Management Act, 1999.

Objective: to facilitate external trade and payment and promote orderly development and
maintenance of foreign exchange market in India.

Issuer of currency:

Issues and exchanges or destroys currency and coins not fit for circulation.
Objective: to give the public adequate quantity of supplies of currency notes and coins
and in good quality.

Developmental role :

Performs a wide range of promotional functions to support national objectives.

Related Functions :

Banker to the Government: performs merchant banking function for the central and the
state governments; also acts as their banker.
Banker to banks: maintains banking accounts of all scheduled banks.
Departments under Reserve Bank of India:

1) Customer Service Department

2) Department of Administration & Personnel Management
3) Department of Banking Operations and Development
4) Department of Banking Supervision
5) Department of Communication
6) Department of Currency Management
7) Department of Economic Analysis and Policy
8) Department of Expenditure & Budgetary Control
9) Department of External Investments and Operations
10) Department of Government and Bank Accounts
11) Department of Information Technology
12) Department of Non-Banking Supervision (DNBS)
13) Department of Payment and Settlement System
14) Department of Statistics and Information Management
15) Financial Markets Department
16) Financial Stability Unit
17) Foreign Exchange Department
18) Human Resource Development Department
19) Inspection Department
20) Internal Debt Management Department
21) Legal Department
22) Monetary Policy Department
23) Premises Department
24) Rajbhasha Department
25) Rural Planning and Credit Department
26) Secretary's Department
27) Urban Banks Department

Department of Currency Management

Major Functions

• The Department attends to the core statutory function of note and coin issue and
currency management. This involves forecasting the demand for fresh banknotes
and coins, placing the indent with four printing presses and mints, receiving
supplies against those indents and distributing them through its 18 Issue Offices
and one Sub office, one Currency Chest and a wide network of currency chests,
(4428 as on June 30, 2006) and small coin depots (4102 as on June 30, 2006). The
 Department also keeps an account of banknotes in circulation and also the stocks
at RBI offices and currency chests. (A currency chest is an extended arm of the
Issue Department maintained with a commercial bank where the RBI stores fresh
and re-issuable banknotes and allows the commercial banks to withdraw cash for
its requirements and deposit its excess cash. A repository is an extension of the
currency chest wherein a portion of the currency chest balance is permitted to be
held at one or more other local branches of the same bank). Soiled banknotes are
also stocked in the chests pending transportation to RBI.
• The Department administers the Reserve Bank of India (Note Refund) Rules. The
rules lay down the circumstances in which value of torn and mutilated banknotes
can be refunded. Soiled banknotes, which are unfit for circulation is mopped up
from circulation for destruction.
• The Department reviews various security features of the currency notes for
incorporation in the banknotes from time to time.
• It studies the features of the counterfeit banknotes detected and seized with a view
to determining the steps needed to be taken to strengthen the integrity of the
banknotes.
• The Department also acts as a nodal Department for the Bharatiya Reserve Bank
Note Mudran Private Ltd.

Current Issues

• The Department vigorously pursues its aim of putting clean banknotes in

circulation in adequate quantity.
• Enhancing the capacity at Regional Offices for examination and disposal of
banknotes through installation of Currency Verification and Processing Systems,
as and when the need arises.
• Consider options to increase the circulation life of banknotes with a view to
reduce / contain the printing cost of banknotes.
• Improve customer service with particular reference to exchange of soiled
banknotes and adjudication of mutilated banknotes.
Weekly Report-1 (06-05-2010) to (13-05-2010)

Learning Objective achieved: Empirical Experience of Corporate working

environment.

1) Study of objectives and working of RBI

2) Study of various departments in RBI
3) Study of Department of Currency Management (DCM)
4) Study of Current Issues in DCM

Project Supervisor: Mr. Rawat, Manager, DCM, RBI.

References:

1) www.rbi.org.in
2) RBI Public Issue 2009-2010
3) Reports provided by Manager