Presentation on RBI and its functions , advantage and disadvantage

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1. Reserve Bank Of India KRUPALU SAMARPANA R E G D . N O -230301120171 BIJAY KUMAR JENA R E G D . N O -230301120172 A NNIMESH SASMA L R E G D . N O . – 230301120173 BIBEK NAYAK R E G D . N O - 230301120174 ANJALI KASOUDHAN R E G D . N O . - 230301120175 SAMIKSHYA BAL R E G D . N O . - 2 2303011 20176 SHAKTI KANAN SAHANI R E G D . N O -230301120177 MANJIT PRADHAN R E G D . N O-230301120178 SWAPNAJIT SAHOO R E G D . N O . – 230301120179 ABHINASH SAHOO R E G D . N O -230301120180 G U I D E D B Y : M R . S A N D I P K U . S A M A N TA R AY A S S T. P R O F. , D E PA R T M E N T O F C S E , C U T M , B B S R .

2. Reserve Bank of India It is a central bank of the country. It acts as a guide, regulator, controller and promoter of the financial system. RBI was established in 1935. The Reserve Bank of India (RBI) is the central bank India, and was established on April 1 ,1935 in accordance with the provisions of the Reserve Bank of India Act, 1934 of India. The Central Office of the Reserve Bank was initially established in Calcutta of India Act, but was permanently moved to Mumbai in 1937. Though originally privately owned, RBI has been fully owned by the Government of India The Preamble of the Reserve Bank of India describes the basic functions of the Reserve Bank as to regulate the issue of Bank Notes. It has 22 regional offices, most of them in state capitals.

3. Departments of RBI Issue Department Banking Department Banking development Department Department of Banking operations Department of Non Banking companies Department of legal affairs Exchange control Department Department of agriculture credit Department of industrial finance Economics Department

4. FUNCTIONS OF RBI 1) Monetary Management/Authority One of the most important functions of RBI is the formulation and execution of  Monetary Policy  and securing monetary stability in India It functions the currency and credit system to its advantage. 2) Supervision and Regulation of Banking and Non-Banking Financial Institutions RBI functions to protect the Interest of depositors through an effective regulatory framework. Keeping a keen eye over the conduct of banking operations and solvency of the banks along with maintaining the overall financial stability through various policy measures 3) Regulation of Foreign Exchange Market, Government Securities Market, and Money Market Foreign Exchange Market:  The Foreign Exchange Management Act 1999 came into light after the liberalization measures introduced in 1991. FEMA 1991 replaced the FERA 1973 and came into effect in June 2022. 4) Foreign Exchange Reserve Management Foreign exchange reserve includes- Foreign Currency Assets (FRAs) Special Drawing Rights (SDRs) Gold RBI is the custodian of India’s foreign exchange reserves. The legal provision regarding the management of foreign exchange reserves is mentioned in RBI Act 1934.

5. 5) Bankers to Central and State Government RBI acts as a banker to the government. RBI is the responsible agency for receiving and paying money on behalf of the various government departments. RBI is also authorized to appoint other banks to act as its agent and undertake banking business on the behalf of the government. 6) Advisor to the Government RBI acts as an advisor to the government when called upon to do so on financial and banking-related matters. 7) Central and State Government’s Debt Manager The debt management policy mainly aims at minimizing the cost of borrowing and smoothening the maturity structure of debt. RBI manages the public debt and also issue new loans on behalf of central and state government. 8) Banker to Banks Banks open their current account with RBI to maintain SLR and CRR. RBI is a common banker for the different banks that enables the settlement of interbank transfers of funds

6. A Currency authority Banker to the Govt. Advisor to the Govt. Banker’s Bank Lender of the last resort Supervision of the Banks Controller of money and credit Foreign exchange control and management Monetary data publication Promotional Functions a ) Promotion of commercial banks b ) Promotion of co- operative banks c ) Promotion of agriculture and rural credit d ) Promotion of industrial finance KEY ROLES OF RBI

7. Advantages of RBI The Reserve Bank of India plays a crucial role in maintaining Monetary stability – It regulates the money supply, interest rates through its monetary policy. Currency issuance – RBI is the sole authority for issuing currency notes, ensuring the security of the monetary system. C) Ensuring financial stability in India – It regulates financial institutions, maintaining the stability of the financial system. It formulates and implements effective policies to regulate the banking sector and promote economic growth.

8. Dis advantages of RBI RBI have some dis- advantages : Bureaucratic processes – Some argue that the RBI’s decision- making processes can be slow. Lack of transparency – It suggest that the RBI’s operations, particularly in monetary policy, lack transparency, making it difficult for the public to understand its actions & intentions fully. Despite of its positive contributions, the Reserve Bank of India faces certain challenges. The various challenges were: Financial stability Monetary policy transmission Financial inclusion Technological risks

9. Prohibitory functions of RBI RBI can not provide any direct financial Assistance to any industry, trade or business It can not purchase its on share. It can not purchase shares of any commercial and industrial undertaking. It can not purchase any immovable property. It can not give loans on the security of shares and property. The Reserve Bank of India can neither buy its own shares nor can it buy shares of other banks or commercial firms. The Reserve Bank of India cannot buy immoral prosperity, barring its own premises, nor can it grant loans against the securities of any such immovable property. The Reserve Bank of India cannot grant a loan to any party without proper security. The Reserve Bank of India cannot give interest to its depositors on their deposits.

10. The measure techniques of credit control 1. Quantitative credit control 2. Selective credit control

11. Quantitative credit control Bank rate Cash reserve ratio Statutory liquidity ratio Open market operations

12. Bank Rate : RBI sets the bank rate, which is the rate at which RBI lends money to commercial banks. Changes in the bank rate influence the cost of borrowing for banks, thereby affecting their lending rates to customers. Open Market Operations (OMO) : RBI buys and sells government securities in the open market to control the money supply. By purchasing securities, RBI injects liquidity into the system, while selling securities withdraws liquidity. Cash Reserve Ratio (CRR) : Banks are required to maintain a certain percentage of their deposits with RBI as cash reserves. Adjusting the CRR influences the liquidity available with banks for lending. Statutory Liquidity Ratio (SLR) : Banks are also mandated to invest a certain percentage of their deposits in specified securities like government bonds. Changes in the SLR impact the liquidity position of banks.

13. Selective credit control The regulation of credit for specific purpose is termed as selective credit control. Some of the selective measures of RBI:- Directions Rationing Margin requirement Moral suasion

14. Directions : RBI issues specific directives to banks regarding the allocation of credit to certain sectors or purposes. Rationing : Rationing involves imposing credit ceilings or limits on the amount of credit that banks can extend to certain sectors or borrowers. Margin Requirement : Margin requirements refer to the minimum amount of money that borrowers need to put down as a deposit when they take out loans. Moral Suasion : Moral suasion involves using informal methods such as persuasion, advice, or encouragement to influence the behavior of banks and financial institutions.

15. Conclusion Hence after knowing all the facts and figures relating the Reserve Bank Of India (RBI), it is possible to conclude that RBI supports our nation’s economy as a vital manner. Its policies and decisions, affect the value of the Indian currency and we can also state that it is the backbone of Indian Economy.

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