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Reserve Bank of India

Act,1934

Section:- 58
Last amended in 1997 to give proper
coverage to NBFC also. RBI established
on 1st April 1935. RBI was nationalized
w.e.f.1st January 1949. Previously
Imperial Bank of India from SBI was
conducting Central Banks functions
It was shareholders bank taken over
by Central Govt. Paid up capital is Rs.
5 Cr. RBIs Central Office is in Mumbai.
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Management of RBI :By a Central Board of


Directors with 4 local boards
at Mumbai, Delhi, Kolkata &
Chennai.
One Governor ( Presently Dr.
Subba Rao) provisions for - 4
- Dy. Governors and - 15 other directors.

Functions of RBI: - 3 Headings


(i) Supervisory & Regulatory
(a)Monopoly of Note Issue (b) Control of Credit
through monetary policy ( c) Exchange Control
(d) Statutory Regulations (e) Bank of Central
Clearance settlement & transfer.
(ii) Promotional & Developmental
(a)Banker to Govt. (b) Banker to Bankers
( c) Agriculture, Industrial & Export finance
(d) Strengthening co-op structure (e) Collection of
data & publication (f) Promotion & development of
Trading Institutions.
(iii) Refinance Operations & Lenders of the last
resort.
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MAJOR DUTIES OF CENTRAL


BANK IN INDIA
(1) Governments

Debt Manager
(2) Monetary Policy Authority
(3) Policy Maker
(4) Prudential Regulator Of Banks &
Non Banking Financial
Companies.
(5) Regulator Of Payment
Mechanism In india
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Functions of RBI
(a)Issuance of Currency : Sec. 22
Sole agency to issue bank notes under
signature of
Governor Rs.2 to Rs. 10000 Except one
rupee
note signed by finance secretary or coins
issued by
Central Govt.
Issue Dept.:- Responsible for issue fresh
notes.
Security aggregate value of gold &

(b) Banker To The Govt.


(Sec.20 for Central Govt. /Sec.21(A) for
State
Govt.
(1)Transacts govt. business & manages
public debt.
(2)Advises Govt. on all monetary matters.
(3)Provides Ways & Means advances
Sec 17(5) Temporary advances
(O/D)extended
by RBI to Central & State Govts. to bridge
the
interval between expenses & receipts to
provide

( c) Bankers Bank:Keep deposits of Commercial


Banks & acts as lender of last
resort Sec.17(2) & 17(3)
banks to approach RBI for
rediscounting, refinance etc.
Provides export refinance &
liquidity Adjustment Facility
Repo Rate means Injecting Funds
Reverse Repo means absorbing
Funds.

(d) Controller of Banks


Banks to obtain license
from RBI second
schedule of RBI Act
Scheduled Banks issues
directions, carries
inspection (onsite & off
site) and exercises

(e) Controller of Credit (Sec.21 &


35A)

Fix interest rate (incl. Bank


Rate) exercise selective credit
control to control inflation &
money supply for growth of
economy & price stability
change in CRR, stipulation of
margin on securities etc. are
used carries sales & purchase
of securities known as open

(f) Statutory Reserves


Banks also maintain certain
percentage of their assets in liquid
cash from under
SLR / CRR requirements
Sec.42(1):- All scheduled commercial
bank (in second sch. of RBI) are
required to keep certain minimum
cash reserves with RBI (3% to 20%).
Present CRR 4.00%.RRB also to
maintain CRR as Sch.Com.Banks of
their net demand & time liabilities.

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(g) Collection of Information


Collects credit information (Under
Sec.45(C) .Borrower enjoying
credit
limits upto Rs.10 Lacs on secured
basis & Rs.5 Lacs on unsecured
basis & share this information
with other banks (Sec.45-D)
Obtains information on suit filed
a/cs & BSR returns Basic
Statistical Returns.

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(h)Maintenance of External
Value of Indian Currency
as well as internal value.
Foreign Exchange reserves are
held by RBI wide powers to
regulate foreign exchange
transactions under FEMA
Foreign Exchange Management
Act.
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Board For Financial Supervision


Sec.58 of RBI Act w.e.f. 16th
November1994.
RBI Governor is ex-officer.
Functions:
Empanelment and selection of
Statutory
Auditors for banks & exercise
integrated
Supervision over com. banks, F.Is &
NBFCs & other Para banking financial
institutions.

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Sec.28: RBI can frame rules fo


refunding value of mutilated, so
imperfect notes.

Sec.29: Bank notes shall be


exempted from stamp duty und
Ind. Stamp Act.

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Sec.31: Prohibits any person o


institution to issue notes payab
bearer on demand currency n
Sec.45: Regulation of NBFC.

Sec.48: Exemption to RBI from


paying Income Tax or Super Tax

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Sec.49:- Announcement
/
Publish Bank Rate Rate
at
which RBI is prepared to
buy
or rediscount bills of
exchange or other
Commercial papers

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What is Scheduled Bank ?


Sec.2(e) of RBI Act 1934 whose name
mentioned in 2nd schedule.
(1)Paid up capital + Reserves not less than
5Lacs.
(2)Affairs not conducted which jeopardize
interest of depositors.
(3)May be state Co-op Bank ,Co. defined
under Companies Act 1956, institution
notified by Central Govt. or any law in force
in any place outside India.
Any Bank not included in 2nd schedule of
RBI is called Non - Scheduled Bank.
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A BIG THANK YOU TO


ALL
B.J. VED

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