ALL YOU NEED TO KNOW ABOUT RBI : THE CENTRAL BANK OF INDIA

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IBPS will be conducting the Interview for SBI PO and related exams soon. All the aspirants are preparing their best for this. In this regard here is an article on Reserve Bank Of India. We hope this article will help in your preparation.

The Reserve Bank of India (RBI) is India's central banking institution, which controls the monetary policy of the Indian rupee. It commenced its operations on 1 April 1935 during the British Rule in accordance with the provisions of the Reserve Bank of India Act, 1934.

Main Functions:

1. Monetary Authority: Monetary authority or monetary policy refers to the use of instruments under RBI control to regulate availability, cost and use of money and credit and providing the citizens the appropriate available monetary facilities.

2. Issuer of Currency: Reserve bank of India is the sole body who is authorized to issue currency in India. While coins are minted by GoI, the RBI works as an agent of GoI for distributing and handling of coins. RBI also works to prevent counterfeiting of currency by regularly upgrading security features of currency. For printing currency, RBI has four facilities at Dewas, Nasik, Mysore and Hyderabad. The RBI is authorized to issue notes up to value of Rupees ten thousand.

3. Banker and Debt Manager to Government: Just like individuals need a bank to carry out their financial transactions effectively & efficiently, Governments also need a bank to carry out their financial transactions. RBI serves this purpose for the Government of India (GoI). As a banker to the GoI, RBI maintains its accounts, receive payments into & make payments out of these accounts. RBI also helps GoI to raise money from public via issuing bonds and government approved securities.

4. Banker's bank and supervisor: RBI also works as banker to all the scheduled commercial banks. All the banks in India maintain accounts with RBI which helps them in clearing & settling interbank transactions and customer transactions smoothly & swiftly. Maintaining accounts with RBI help banks to maintain statutory reserve requirements. RBI also acts as lender of last resort for all the banks.

5. Regulator of the Banking System: RBI has the responsibility of regulating the nation's financial system. As a regulator and supervisor of the Indian banking system it ensures financial stability & public confidence in the banking system. RBI uses methods like On-site inspections, off-site surveillance, scrutiny & periodic meetings to supervise new bank licenses, setting capital requirements and regulating interest rates in specific areas. RBI is currently focused on implementing Basel III norms.

6. Manager of Foreign Exchange: With increasing integration of the Indian economy with the global economy arising from greater trade and capital flows, the foreign exchange market has evolved as a key segment of the Indian financial market and RBI has an important role to play in regulating & managing this segment. RBI manages forex and gold reserves of the nation.

On a given day, the foreign exchange rate reflects the demand for and supply of foreign exchange arising from trade and capital transactions. The RBI’s Financial Markets Department (FMD) participates in the foreign exchange market by undertaking sales / purchases of foreign currency to ease volatility in periods of excess demand for/supply of foreign currency.

7. Regulator and Supervisor of the Payment and Settlement Systems: Payment and settlement systems play an important role in improving overall economic efficiency. The Payment and Settlement Systems Act of 2007 (PSS Act) gives the Reserve Bank oversight authority, including regulation and supervision, for the payment and settlement systems in the country. In this role, the RBI focuses on the development and functioning of safe, secure and efficient payment and settlement mechanisms. Two payment systems National Electronic Fund Transfer (NEFT) and Real Time Gross Settlement (RTGS) allow individuals, companies and firms to transfer funds from one bank to another. These facilities can only be used for transferring money within the country.

NEFT operates on a deferred net settlement (DNS) basis and settles transactions in batches. The settlement takes place for all transactions received till a particular cut-off time. It operates in hourly batches — there are 12 settlements from 8 am to 7 pm on weekdays and SIX between 8 am and 1 pm on Saturdays.Any transaction initiated after the designated time would have to wait till the next settlement time. In RTGS, transactions are processed continuously, all through the business hours. RBI’s settlement time is 9 am to 4:30 pm on weekdays and 9 am to 2:00 pm on Saturdays.

8. Developmental Role: This is one of the most critical role RBI plays in building the country's financial structure. Key tools in this effort include Priority Sector Lending such as agriculture, micro and small enterprises (MSE), housing and education. RBI work towards strengthening and supporting small local banks and encourage banks to open branches in rural areas to include large section of society in banking net.

9. Monetary Policy: Monetary Policy refers to the process employed by Central bank of the country to control availability & cost of currency and thus keeping Inflation & Deflation low and stable. The central bank does so by using various tools. Broadly these tools can be categorized in two parts as Quantitative & Qualitative tools.

List of Governors         Year of Service

Sir Osborne Smith  ----- 01-04-1935 to 30-06-1937


Sir James Taylor   -----  01-07-1937 to 17-02-1943


Sir C D Deshmukh ----- 11-08-1943 to 30-06-1949


Sir Benegal Rama Rau ---- 01-07-1949 to 14-01-1957


K G Ambegaonkar ------ 14-01-1957 to 28-02-1957


H V R Iengar ----- 01-03-1957 to 28-02-1962


P C Bhattacharya ----- 01-03-1962 to 30-06-1967


L K Jha -------    01-07-1967 to 03-05-1970


B N Adarkar ------- 04-05-1970 to 15-06-1970


S Jagannathan ------- 16-06-1970 to 19-05-1975


N C Sen Gupta ------  19-05-1975 to 19-08-1975


K R Puri ---------- 20-08-1975 to 02-05-1977


M Narasimham ------- 02-05-1977 to 30-11-1977


Dr. I G Patel -------- 01-12-1977 to 15-09-1982


Dr. Manmohan Singh ------- 16-09-1982 to 14-01-1985


A Ghosh------   15-01-1985 to 04-02-1985


R N Malhotra ------- 04-02-1985 to 22-12-1990


S Venkitaramanan -------- 22-12-1990 to 21-12-1992


Dr. C Rangarajan ------ 22-12-1992 to 21-11-1997


Dr. Bimal Jalan ----- 22-11-1997 to 06-09-2003


Dr. Y V Reddy ------- 06-09-2003 to 05-09-2008


Dr. D. Subbarao -------- 05-09-2008 to 04-09-13


Dr. Raghuram Rajan ----- 04-09-2013 to date


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