Reserve Bank of

India
And its role in banking industry

Highlights

Introduction to RBI
The Evolution of Banking
Roles of RBI in banking industry
Factors in an Economy
Indian Banks Association
Banking codes and standards board of India
Banking Ombudsman Scheme
Banking Regulations Act 1949
Globalization In Banking Sector in India
Improvements in Banking Sector
New Schemes, Mergers and Acquisitions
Conclusion

RBI
The LOGO
and The
Governor
Mr.
Raghuram
Rajan

INTRODUCTION
The central Bank of India

Established in 1st April 1935

under the Reserve Bank Act.
The RBI is headquartered in
Mumbai and the Present
governor is Raghuram Rajan.
Since Nationalization in 1949
Reserve Bank of India is owned
by government of India.
The basic functions to regulate
the issue of bank notes, keep
reserves to secure monetary
stability in India, and generally
to operate the currency and
credit system in the best
interests of the country.

Functions of RBI
Issue Of currency
Development Role
Banker to the Government
Banker to the bank
Role of RBI in inflation control
Formulate monetary policy
Manger of Foreign Reserve
Clearing House functions
Regulations of Banking System

Issue of currency
To ensure adequate quantity of supplies of currency notes and

coins of good quality.

Issues new currency and destroys currency and coins not fit for
circulation
It has to keep in forms of gold and foreign securities as per
statutory rules against notes and coins issued.

Developmental Role
To develop the quality of banking system in India.
Performs a wide range of promotional functions to support national

objectives
To establish fiancial institutions of national importance for e.g:
NABARD, IDBI etc.

Banker to
the
Government
Performs all banking
functions for the central
and state governments and
also acts as their banker
excepting that of Jammu
and Kashmir . It makes
loans and advances to the
states and local authorities.
It acts as adviser to the
government on all monetary
and banking matters.

Banker
to the
banks
Maintains banking

accounts of all
scheduled banks
RBI also regulates the
opening and installation
of ATM and fresh
currency notes for ATM
are supplied by RBI
RBI regulates the
opening of new
branches by the banks.
Ensures that all the
banks follow the KYC
norms

RBI role in inflation control

Monetary Policy

It includes the interest

rates when the bank
increases the interest
rates than there is a
reduction in the borrowers
and people try to save
more as the interest has
increased.

Fiscal Policy

It is related to the direct

taxes and the government
spending. When direct
taxes increased and the
government spending
increased than the
disposable income of the
people reduces and hence
the demand reduces .

Instruments

Quantitative
Measures

Qualitative Measures

Bank rate also called as

Discount rate.
Also includes Repo
Rates
Open market operations
buying and selling of
government securities.
Variable Reserve Ratio
it includes C.R.R and
S.L.R

Direct Action
Moral Persuasion
Legislation
Publicity

Bank Rate
Interest rates that is charged by a countrys

central bank on loans and advances to control

money supply in the banking sector.
It is done on quarterly basis to control inflation
and stabilize the countrys exchange rates.
Change in bank rates effects customers as it
influences Prime Interest Rates for personal
loans.
The present bank rate is 9%.

Repo rate
Whenever the banks have shortage of funds

they can borrow it from the central bank.

It is the rate at which banks borrow currency
from the central bank.

Reverse repo rate

It is the rate at which the bank park surplus

funds with reserve bank

It is mostly done when there is a surplus
liquidity in the market by the central bank.

Direct action
The central bank may take direct action

gaianst commercial banks that violate the

rules, orders or advise of the central banks.

Moral persuasion
Method by which central bank may get credit

supply expanded or contracted.

Legislation
RBI may also opt necessary legislation for

expanding or contracting credit money in the

market.

Publicity
RBI may resort to massive advertising

campaign in the news paper, magazines and

journals depicting the poor economic
conditions of the country and control credit
either by expansion or contraction.

Technology in banking
Physical as well as virtual expansion of
banking through mobile banking, internet
banking, and telephone banking, bio-metric
and mobile ATMs is taking place since last
decade and has gained momentum in last few
years.
Satellite banking is also an upcoming
technological innovation in the Indian banking
industry, which is expected to help in solving
the problem of weak terrestrial
communication links in many parts of the
country.

Improvements in Banking
The Indian banking sector has seen
unprecedented growth along with remarkable
improvement in its quality of assets and
efficiency since economic liberalisation began
in the early 1990s.
The growth is not restricted to the
metropolitan or urban areas. Financial
inclusion has been at the forefront of
regulators and policy makers in India, a
country where approximately half of the
population still does not have access to
banking services.

Top News in Banking Industry

Introduction of a new bank in the industry.

RBI grants in-principle approval to IDFC(Infrastructure

Development Finance Company Ltd) to set up banks. The inprinciple approval will be valid for 18 months. RBI gets green
signal to issue bank licences.
ING Vysya Bank on Thursday decided to merge with Kotak

Mahindra Bank, creating the fourth largest private sector bank

in the country.
The amalgamation is subject to the approval of the
shareholders of Kotak and ING Vysya respectively, Reserve
Bank of India under the Banking Regulation Act, the
Competition Commission of India and such other regulatory
approvals as may be required.

Thank
You