Reserve Bank of India

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Reserve Bank of India भारतीय रिज़र्व बैंक
The RBI headquarters in Mumbai
Headquarters	Mumbai, Maharashtra, India
Established	April 1, 1935
Governor	Duvvuri Subbarao
Central Bank of	India
Currency	Indian rupee
ISO 4217 Code	INR
Base borrowing rate	5.2
Base deposit rate	9.5
Website	http://www.rbi.org.in

The Reserve Bank of India (RBI, Hindi: भारतीय रिज़र्व बैंक) is the central bank of India, and 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. Though originally privately owned, RBI has been fully owned by the Government of India since nationalization in 1949.

Duvvuri Subbarao who succeeded Y. Venugopal Reddy on September 2, 2008 is the current Governor of RBI.

The Reserve Bank of India was set up on the recommendations of the Hilton Young Commission. The commission submitted its report in the year 1926, though the bank was not set up for nine years.

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.

It has 22 regional offices, most of them in state capitals.

Contents 1 Policy rate (02-Nov-2008) 2 Reserve Ratios (2008) 3 Lending or Deposit Rates (2008) 4 Board of directors 4.1 Those renominated to the board 4.2 Retiring directors 5 Main objectives 5.1 Monetary authority 5.2 System of Note issue 5.3 Regulator and supervisor of the financial system 5.4 Manager of exchange control 5.5 Issuer of currency 5.6 Developmental role 5.7 Related functions 6 Major liabilities of commercial banks 7 Major assets of commercial banks 8 Tarapore committee 9 Notes 10 See also 11 External links

[edit] Policy rate (02-Nov-2008)

The Repo Rate has been cut by 50 bps to 7.5 % w.e.f. November 03, 2008.
The SLR has been cut by 100 bps to 24.0 % w.e.f. November 08, 2008.
The CRR has been cut by 100 bps in two stages.
First 50 bps cut w.e.f. October 25, 2008 and another 50 bps cut from November 08, 2008. The current CRR is thus 5.5.

[edit] Reserve Ratios (2008)

Cash Reserve Ratio 5.6%. Statutory Liquidity Ratio 24.0%.

[edit] Lending or Deposit Rates (2008)

Prime Lending Rate 12.75%-13.25%. Saving Bank Rate 3.5% Deposit Rate 7.50%-10.75 .

[edit] Board of directors

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.

On June 27, 2006, the Union Government of India reconstituted the Central Board of Directors of the Reserve Bank of India (RBI) with 13 members, including Azim Premji and Kumar Mangalam Birla.

[edit] Those renominated to the board

• Y. H. Malegam, Chartered Accountant, (to represent Western Area Local Board)
• H. P. Ranina, Supreme Court Advocate
• Ashok S. Ganguly, Member, Investment Commission and Chairman, ICICI OneSource

[edit] Retiring directors

• Narayana Murthy
• Mihir Rakshit
• K. Madhava Rao
• V. S. Vyas
• K. P. Singh
• Amrita Patel

On 1 July, 2006, in an attempt to enhance the quality of customer service and strengthen the grievance redressal mechanism, the Reserve Bank of India constituted a new department — Customer Service Department (CSD).

[edit] Main objectives

[edit] Monetary authority

• Formulates, implements and monitors the Monetary Policy, announced twice a year.
• Announces the Credit Policy, announced twice a year - in April it announces new policy initiatives, the October pronouncement is a review of the April policy. ^[1]
• Objective: Maintaining price stability and ensuring adequate flow of credit to productive sectors.
• Maintain optimum Liquidity in the economy.

[edit] System of Note issue

• RBI Maintains Minimum Reserve System for Note issue.

This means that RBI can issue any amount of currency notes provided it keeps the minimum statutory limit of Rs.200 crores worth Gold and Securities.

[edit] 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. The Banking Ombudsman Scheme has been formulated by the Reserve Bank of India (RBI) for effective redressal of complaints by bank customers.

[edit] Manager of exchange control

• 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.

[edit] Issuer of currency

• Issues and exchanges or destroys currency and coins not fit for circulation.
• Objective: the main objective is to give the public adequate supply of currency of good quality and to provide loans to commercial banks to maintain or improve the GDP.

The basic objectives of RBI are to issue bank notes, to maintain the currency and credit system of the country to utilize it in its best advantage, and to maintain the reserves. RBI maintains the economic structure of the country so that it can achieve the objective of price stability as well as economic development, because both objectives are diverse in themselves.

[edit] Developmental role

• Performs a wide range of promotional functions to support national objectives.
• To incubate or establish financial institutions of national importance, for e.g: NABARD, IDBI,ICICI

[edit] 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.
• Owner and operator of the depository (SGL) and exchange (NDS) for government bonds.

There is now an international consensus about the need to focus the tasks of a central bank upon central banking. RBI is far out of touch with such a principle, owing to the sprawling mandate described above.

[edit] Major liabilities of commercial banks

Figures below are in millions of Indian Rupees. See [1] and [2]

Year	Deposits and other Accounts[2]	Bills Payable
1950	9,983	173
1955	11,592	262
1960	20,218	317
1965	32,897	446
1970	64,793	923
1975	156,665	2,254
1980	439,869	10,995
1985	1,032,134	24,556
1990	1,820,468	38,656
1995	3,984,352	116,622

[edit] Major assets of commercial banks

Figures below are in millions of Indian Rupees. See [3] and [4]

Year	Investments[3]	Advances[4]
1950	4,330	5,353
1955	4,600	7,037
1960	7,241	12,458
1965	9,884	21,954
1970	18,148	46,850
1975	45,999	106,167
1980	126,642	272,673
1985	303,378	623,553
1990	687,151	1,095,412
1995	1,750,206	2,243,308

[edit] Tarapore committee

The Tarapore committee is a committee setup by the Reserve Bank of India under the chairmanship of former RBI deputy governor S S Tarapore to "lay the road map" to capital account convertibility.

The five-member committee recommended a three-year timeframe for complete convertibility by 1999-2000.

In March 2006, the Finance Minister of India, P Chidambaram said that the Central government was "within striking distance" of implementing the committee's report.

• During partition, the federal reserve was split by the British Raj to aid India and Pakistan separately. Some claim that Pakistan has never gotten its share to date, which is incorrect. On January 19, 1948, Pakistan received its share of 56 Crores Rupees bullion. Apart from that, Nizam of Hyderabad illegally transferred the funds for the state of Hyderabad to Pakistan, and Pakistan has not yet repaid these funds. Nawab of Junagarh fled with 3 Crore cash, which was government property. When it looked like the British would help India get that money back, the Pakistani government helped Nawab flee to Europe with the money using Pakistani government planes. One of the planes refuelling at Beirut crashed in the Aegean Sea and money was declared lost. This story has led to several modern treasure hunts in that area.^{[citation needed]}

[edit] Notes

[edit] See also

• Governors of the Reserve Bank of India
• Indian rupee
• Central Bank

[edit] External links

• Reserve Bank of India Official site
• Reserve Bank of India Ombudsman site
• Reforms on the mandate of RBI
• RBI operations
• FAQs on RBI
• cbrates.com: Central Bank Rate Decisions and Monetary Meetings

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