ASEAN | Association of Southeast Asian Nations

• Open Market Operations(OMO):
• Operations conducted by the Central Bank of any country under which it buys government securities from commercial Bank or Sell securities to Commercial Banks.

• Repo Rate:
• Current Rate is 6.25%.
• also known as Repurchase Rate.
• Exercised by RBI since 1992.
• According to which, RBI buys govt securities from banks repos are essentially short-term operations conducted to manage the supply and demand of liquidity in a short period.
• Thus Repo means the injection of Liquidity by the RBI.

• Reverse Repo Rate:
• Current Repo Rate is 6.25%.
• Also known as Reverse Repo Operation.
• Started by RBI since 1996.
• It implies that it is banks which lend to the RBI by buying securities from RBI for a short Period with a promise to sell them back to the RBI on a specified date at a certain price.

• Rationing of credit:
• According to this method, the RBI directs banks to give credits to the specified list of priority sectors defined by RBI. Eg. agriculture, small-scale industries, poverty alleviation, etc.
• Regulation of Credit for Consumption purpose:
• By the use of this measure RBI direct banks to restrict credit for the purchase of consumer durables like fridge, TV, etc. and instead give more credit for a Productive purpose. 
• Variation of margin requirements:
• According to this measure RBI time and again asks banks to vary (lower or raise) margins on loans given by the banks for sensitive commodities eg: When a person required to take a loan to buy a truck then bank will give 85% loan & ask 15% for paying on his own.(Down Payment).
• Moral Control: 
• When banks refrain from obeying RBI regulations, the RBI applies moral pressure or advice from time to time to restrain from doing it and when the banks do not obey, it allows the public to know about it.
• Direct Action:
• Charge penalty interest rate
• Moratorium for few months 
• Cancel the license of the bank
• Stop lending

• Central Bank of the Country.
• Established under the Reserve Bank of India Act,1934 on 1st April 1935.
• Nationalized in 1st January 1949.

• 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)
  Current Rates





Bank Rate (BR)
is 6.50%
Cash Reserve Ratio (CRR)
is 4%
Open Market Operations (OMO)
Statutory Liquidity Ratio (SLR)
is 19.5%
Repo/Reverse Rate
Repo Rate is 6.25%
Reverse Repo Rate is 6.00%
• Qualitative Measures 
1. Rationing of Credit
2. Regulating of Credit for Consumption Purpose
3. Variation of Margin Requirements.
4. Moral Control 
5. 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.