o Monetary Authority o Issuer of Currency o Banker & Debt Manager to Govt. o Bankers to Banks. o Regulator of Banking System.

o Manager of Foreign Exchange. o Regulator & Supervisor of the Payment & Settlement Systems. o Developmental Role

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Monetary Authority Issuer of Currency Banker & Debt Manager to Govt. Bankers to Banks Regulator of Banking System Manager of Foreign Exchange Regulator & Supervisor of the Payment & Settlement Systems o Developmental Role

Main Objective of monetary policy in India are : Maintaining price Stability Ensuring adequate supply of Credit. Financial stability.

The basic function of the RBI are to regulate the issue of Bank notes & the keeping of reserves with a view to securing monetary stability in India & generally to operate the currency & credit system of the country to its advantage.

RBI Approach: Monitor & analysis of movement of a number of indicators including interest rates, inflation rate, money Supply, credit, exchange rate , trade, capital flow & fiscal position, along with trends in output RBI Tools:
RBI monetary policy Dept. formulates monetary policy. RBI Financial Markets Dept. handles day to day liquidity mgmt. operations. Several direct & indirect instruments are used in formulation & implementation of monetary policy.

Presenter : Sharad Sant

The RBI is the nations sole note issuing authority. Along with the Govt. of India, they are responsible for the design , production & overall management of the nations currency, with the goal of ensuring an adequate supply of clean & genuine notes. The RBI also makes sure there is an adequate supply of coins, produced by the Govt. In consultation with the Govt., they regularly address security issues & target ways to enhance security features to reduce the risk of counterfeiting or forgery.

Dept of Currency Mgmt. oversees production & manages the distribution of currency. Making Currency consists of notes & coins accessible to the public in all parts of the Country.

Has Authority to issue notes up to value of Rupees Ten Thousand.

Denomination of coin and notes in circulation :

Coins in circulation : 50 paise, 1, 2, 5 and 10 Rupees.

Notes in circulation : Rs. 5, 10, 20, 50, 100, 500 and 1000. Rupees.

Bank notes are legal tender at any place in India for payment without limit.

As per India Coinage Act : Rupees coin (1 and above ) can be used to pay / settle for any sum. Paise 50 can be used to pay / settle any sum not exceeding Ten Rupees.

 Managing the Govt. banking transactions is a key RBI Role. As a banker to the Central Govt., the Reserve Bank maintain its accounts, receives money into and makes payments out of these accounts & facilitates the transfer of Government funds. Also Acts as bankers to those state Government that have entered into an agreement with RBI.
RBI Role as Banker and Debt Manager to Govt. Undertake banking transaction for Central & State Government. As a banker to the Central Govt., the Reserve Bank maintain its accounts, receives money into and makes payments out of these accounts & facilitates the transfer of Government funds. Also Acts as bankers to those state Government that have entered into an agreement with RBI. Managing the Govt. domestic debts efficiently & effectively. Developing the market for Govt. Securities. RBI Tools : At the end of each day, there electronic system automatically consolidate all the Govt.s transactions to determine final position. If the balance in the Govt.s account shows a negative position, they extends a short-term, interest bearing advance called a Ways and Means Advance i.e. WMA

Like the Individual consumers, businesses and organizations of all kinds, banks needs their own mechanism to transfer the fund & settle inter-bank transactions such as borrowing from and lending to other banks, and customer transactions. As the bankers to bank, RBI fulfills this role. In effect, all bank operating in India have accounts with the RBI, just as individual & businesses have accounts with their banks.
RBI Role : Enabling smooth, swift and seamless clearing & settlement of inter-bank obligations. Providing efficient means of fund transfer for bank. Enabling banks to maintain their accounts with RBI for purpose of Statutory reserve requirements and maintain transaction balances. Acts as lender of the last resort.

Banks are the fundamental to the nations financial system. The Central Bank has a critical role to play in ensuring the safety and soundness of the banking systems and in maintaining financial stability and public confidence in this system. As the regulator and supervisor of the banking system, the Reserve Bank protects the interest of depositors, ensures a framework for orderly development and conduct of banking operations conducive to customer interest and maintains overall financial stability through preventive and corrective measures.
RBI Approach : Regulate and supervises the nations financial systems. Different departments of the Reserve Bank oversee the various entities that comprise Indias financial infrastructure. They oversee : Commercial banks & all-India development financial institutions : Regulated by the Dept. of Banking Operations & Development, supervised by the Dept. of Banking Supervision. Urban Co-operative banks : Regulated & supervised by the Urban Banks Dept. Regional Rural Bank (RRB), District Central Co-operative Bank: Regulated by the Rural Planning & Credit Dept. and supervisory by NABARD. Non-Banking Financial Companies (NBFC) : Regulated & supervised by the Dept. of Non-Banking Supervision.

With the transition to a market-based system for determining the external value of the Indian rupees, the foreign exchange market in India gained importance in the early reform period. In recent year, 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.

RBI approach : The RBI play an important role in the regulation & development of foreign exchange market in India & assumes three important roles relating to foreign exchange : Regulating transactions related to the external sector & facilitating the development of the foreign exchange market. Ensuring smooth conduct & orderly conditions in the domestic foreign exchange market. Managing the foreign currency market & gold reserves of the country.

This includes insuring that credit is available to productive sectors of the economy, establishing institutions designed to build the countrys financial infrastructure, expanding access to affordable financial services & promoting financial educations & literacy.

RBI Approach : Over the years, the Reserve Bank added new institutions as the economy has evolved. Some of the institutions established by the RBI includes :
Deposit insurance & Credit Guarantee Corporation 1962, to provide protection to the bank depositors & guarantee cover to credit facilities extended to certain categories of small borrowers. Unit Trust of India (UTI) 1964, the first mutual fund of the country. Industrial Development Bank of India (IDBI) 1964, a development finance institution for Industry. National Bank of Agriculture & Rural Development (NABARD) 1982, for promoting rural & agricultural credit. Discount & finance House of India 1988, a money market intermediary & a primary dealer in Govt. securities. National Housing Bank 1989, an apex financial institution for promoting & regulating housing finance. Securities & Trading Corporation of India 1994, a primary dealer.