Reserve Bank of India
- Central Bank of the Country.
- Established under the Reserve Bank of India Act,1934 on 1st April 1935.
- Nationalized in 1st January 1949.
Functions of RBI (V.Imp)
- The only authority to issue currency in India.
- It issues two Rupee notes while 1 Rupee and subsidiary coins are issued by Finance Ministry but distributed by the RBI on behalf of the government.
- It issues currency under Minimum Reserve System under which it keeps a minimum backing of 200 crores out of which 115 crores worth of gold & 85 crores worth of foreign securities i.e bonds of U.S govt. and some other advanced countries of Europe.
- With this Backing, RBI(Reserve Bank of India) can issue an unlimited amount of currency in the country. It issues currencies according to the projection of GDP.
- RBI is a government Bank.
- RBI is Banker's Bank.
- RBI Acts as an agent to the Indian Govt, as a member to the IMF(Indian Monetary Fund).
- RBI Acts as the central clearinghouse for inter-bank transactions.
- RBI is the custodian of India's Foreign exchange reserves.
- Lender of the last Resort which means if a bank fails to get funds from any other source it can always rely on RBI(Reserve Bank of India).
- RBI is the Controller of Credit given by Bank to various sectors of the Economy. It controls credit by adopting the following 2 sets of measures.
- Quantitative Measures(Imp for SSC, CHSL, IBPS, RRB and other online Banking Exams)
- Bank Rate (BR)
- Cash Reserve Ratio (CRR)
- Open Market Operations (OMO)
- Statutory Liquidity Ratio (SLR)
- Repo/Reverse Rate
- Qualitative Measures
- Rationing of Credit
- Regulating of Credit for Consumption Purpose
- Variation of Margin Requirements.
- Moral Control
- Direct Action
Banking System of India is a topic of very high importance. Questions from this section will be asked in IBPS,RRB,SSC CGL 2018, SBI PO, and other online banking exams.
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