FUNCTIONS-OF-RBI.pdf

Finance

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FunctionOf
RIB

2. Table Contents
–Definition
–Introduction
–Facts About RBI
–Functions of RBI
–Conclusion
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3. Definition
The central bank of
India, RBI is also
regarded as a bank of
banks owing to the
functions of RBI. It
was established on
April 1, 1935, under
the Reserve Bank of
India Act, 1934.
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4. Introduction
•In the beginning, the headquarters of RBI
was established in Calcutta. However, soon
after, in 1937, it was permanently shifted to
Mumbai.
•As of October 2021, the Governor of the
Reserve Bank of India is Mr Shaktikanta Das.
He is the 25th RBI Governor and all the RBI
functions are supervised by him.
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5. 5

6. Facts AboutRBI
•The first Governor of RBI was Osborne Smith,
•The first Indian governor of RBI was C D
Deshmukh.
•Originally, the Reserve Bank of India was
privately owned; and was established as a
private bank with two extra functions: the
regulation and control of all banks in India, and
to be the banker to the then government.
●●●
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7. Facts AboutRBI
•Since its nationalization in 1949, RBI has been
wholly owned by the Government of India and
thus, some new roles were added to the list of
functions of RBI!
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8. Functions of RBI
The Issuer of Bank Notes
•The most important function of RBI is the
issuance of currency notes and coins, except
the one rupee note and coin which are
issued by the Ministry of Finance. All other
notes bear the signature of the RBI Governor.
•However, the agency of distribution of all
notes and coins issued by the Government of
India is the Reserve Bank of India.
●●●
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9. Functions of RBI
Banker to the Government
•Another chief function of RBI is that it takes
care of the banking needs of the
government, which includes maintaining &
operating the deposit accounts of the
government, collecting the receipts of funds,
and making payments on behalf of the
Government of India.
●●●
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10. Functions of RBI
Custodian of Cash Reserves of Commercial
Banks
•Commercial banks are required to maintain the
cash reserves at a rate decided by the RBI in its
monetary policy.
Custodian of Foreign Exchange Reserve
•Another of the important functions of RBI is
maintaining a reserve of foreign currencies that
enables the RBI to deal with any crisis situation.
●●●
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11. Functions of RBI
Lender of the Last Resort
•Often regarded as the banker of banks, the
RBI acts as a parent to all commercial banks
in India. Thus, it becomes the lender of the
last resort for all banks when they are in a
crisis situation.
•RBI helps them by lending money, although
at higher RoI, to sail through the tide of
financial difficulties.
●●●
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12. Functions of RBI
Debt Manager for Government
•The government of India stores their
money in the RBI.
•They keep these deposits of government
free of interest. Besides, it all makes and
receives the payment and help floating
the new loans.
●●●
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13. Functions of RBI
Accounts Settlement and Central Clearance
•All the commercial banks in India, stores their
surplus cash in the Reserve Bank of India.
•Thus, it becomes easier for them to deal with
each other and settle any claims that are
entered in the books. This has also made the
clearing account a very important function
for the RBI.
●●●
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14. Functions of RBI
Government Securities
•Besides other government deposits, RBI
also manages government securities.
•They administer the investment for the
institutions that invest a portion of their
total liabilities or assets in the government
securities.
●●●
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15. Functions of RBI
Controller of Credit
•RBI controls the credit created by the
commercial banks in India, in accordance
with the economic priorities of the
government of India.
•RBI uses quantitative and qualitative
methods to control and regulate the flow
of money in the market.
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16. Conclusion
✓All the central activities about the money in India
is controlled by the RBI. They are responsible for
the changing exchange rates as well as the
interest rates.
✓But there are many other functions as well which
RBI performs. The functioning of RBI is fully done
the central board of directors.
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