There is only one Central Bank in a country whose main function is to control operations of the rest of the banking

system.

It

was established with the objective of ensuring monetary stability and operating the currency and credit system of the country to its advantage.
addition, from the beginning, the Reserve Bank has played an active developmental role, particularly for the agriculture and rural sectors.

In

 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."

The origins of the RBI can be traced to 1926, when the Royal Commission on Indian Currency and Finance recommended the creation of a central bank for India to separate the control of currency and credit from the Government and to augment banking facilities throughout the country. The RBI Act of 1934 established the Reserve Bank and set in motion a series of actions culminating in the start of operations in 1935. Since then, the RBIs role and functions have undergone numerous changes, as the nature of the

Central Board of Directors Governor Deputy Governors Executive Directors Principal Chief General Manager Chief General Managers General Managers Deputy General Managers Assistant General Managers Managers Assistant Managers Support Staff

The Central Board of Directors is at the top of the Reserve Banks organizational structure. It delegates specific functions to the Local Boards and various committees. The Governor is the Reserve Banks chief executive. The Governor supervises and directs the affairs and business of the RBI. The management team also includes Deputy Governors and Executive Directors. The Central Government nominates fourteen Directors on the Central Board, including one Director each from the four Local Boards. The Government also nominates one Government official as a Director representing the Government, who is usually the Finance Secretary to the Government of India. The Reserve Bank Governor and a maximum of four Deputy Governors are also ex officio Directors on the Central Board.

RBI HEAD OFFICE IN MUMBAI

RBI GOVERNOR-DR.Duvvuri Subbarao

The Reserve Bank also has four Local Boards, constituted by the Central Government under the RBI Act, one each for the Western, Eastern, Northern and Southern areas of the country, which are located in Mumbai, Kolkata, New Delhi and Chennai.
These Boards represent territorial and economic interests of their respective areas, and advise the Central Board on matters, such as, issues relating to local cooperative and indigenous banks. They also perform other functions that the Central

The reserve bank has a network of offices and branches through which it discharges its responsibilities. The units operating in the four metros Mumbai, Kolkata, Delhi and Chennai are known as offices. Currently, the reserve bank has its offices, including branches, at 27 locations in India.
The offices and larger branches are headed by a senior officer in the rank of chief general manager, while smaller branches are headed by a senior

 As

of June 30, 2009, the Reserve Bank had a total staff strength of 20,572.
46% of the employees were in the officer grade, 19% in the clerical cadre and the remaining 35% were sub staff.

Nearly

While

17,351 staff members were attached to Regional Offices, 3,221 were attached to various Central Office departments.

1.SOLE CURRENCY AUTHORITY: Barring one rupee notes & coins, RBI is the sole authority for the issue of currency in India.

The distribution of one rupee notes and coins and small coins all over the country is undertaken by the Reserve Bank as agent of the Government. The 1st issue of notes in the denomination of Rs.5 & Rs.10 was in Janyary,1938. Notes in higher denomination were issued later. For the issue of notes, RBI has separate department, "THE DEPARTMENT OF ISSUE.

All the currency issued by the RBI is its monetary liability & is backed by assets of equal value.

RBI is the banker for all Governments In India(except J&K).

RBI provides all those banking services to the Central & State Governments which a commercial bank performs to its customers. It gives loans to State Governments for the development of AGRICULTURE. It manages new issues of Government loans, servicing the public debt outstanding & prepares the market for Government securities.

The RBIs responsibility as Bankers Banks is twofold: 1st, It acted as a source of reserves to the banking system, especially for meeting seasonal requirements. 2nd responsibility-To Ensure Banks were established & run on sound lines.

The scheduled banks in India are required a stipulated ratio(3%-15%)to keep with RBI of their Total Liabilities. Reserves of the Banks with RBI may be used to meet the cash needs of Commercial Banks in

The RBI is the controller of credit i.e. it has the power to influence the volume of credit created by banks in India.

It can control credit in the following manner: A)Changing the statutory Liquidity Ratio

B)Issuing directions related to purpose of advances C)Changing the Bank Rate & its policy of granting accommodation to the commercial banks D)Changing the Statutory Reserve Ratio maintained by scheduled banks with RBI i.e. CRR E)Exercising moral influence on the Banks

RBI is the custodian of the foreign exchange reserves in India.

It manages exchange control & external value of rupee. The exchange control is operated in a manner so that the demand for foreign exchange is within the limits of its available supplies. This planned use arises in view of general shortage of foreign exchange reserves in most Developing countries. All foreign exchange transactions made by the RBI are

 RBI

provides, through its publications, useful data & information on various aspects of the economy, particularly monetary & banking activities

Three

important of RBI are (a) Reserve Bank of India Bulletin(Monthly) ;(b)Report on Currency & Finance (Annual) and (c) Handbook of Statistics on Indian Economy.

RBI now performs a variety of developmental & promotional functions, which, at one time, were regarded as outside the normal scope of central banking. It was asked to promote banking habit, extend banking facilities to rural and semi-urban areas, and establish and promote new specialized financing agencies. The Bank has developed the co-operative credit movement to encourage saving, to eliminate moneylenders from the villages and to route its short term credit to agriculture. The RBI has set up the Agricultural Refinance and

 One

of the most important functions of central banks is formulation and execution of monetary policy. Monetary policy deals with the use of various policy instruments for influencing the cost and availability of money in the economy. As macroeconomic conditions change, a central bank may change the choice of instruments in its monetary policy. The overall goal is to promote economic growth and ensure price stability.

 Over

time, the objectives of monetary policy in India have evolved to include maintaining price stability, ensuring adequate flow of credit to productive sectors of the economy for supporting economic growth, and achieving financial stability. The Governor of the Reserve Bank announces the Monetary Policy in April every year for the financial year that ends in the following March. This is followed by three quarterly reviews in July, October and January.

 The

Reserve Bank traditionally relied on direct instruments of monetary control such as Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR).
Reserve Ratio indicates the quantum of cash that banks are required to keep with the Reserve Bank as a proportion of their net demand and time liabilities. SLR prescribes the amount of money that banks must invest in securities issued by the

Cash

 The

RBI restructured its operating framework for monetary policy to rely more on indirect instruments such as Open Market Operations (OMOs). addition, in the early 2000s, RBI instituted Liquidity Adjustment Facility (LAF) to manage day-to-day liquidity in the banking system. repo rate (at which liquidity is injected) and reverse repo rate (at which liquidity is absorbed) under the LAF have emerged as the main instruments for the Reserve Banks interest rate signaling in the Indian Economy.

In

The

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Banking & financial Markets in India Book: RBI-Working & functions