By:

M GOURI NAIR 2022/592

LAKSHIKA MAHAWAR
2022/578
KHUSHI BHATIA 2022/520
IPSITA SINHA ROY
2022/418
 The Reserve Bank of India is the central bank of the country. Central banks are a
relatively recent innovation and most central banks, as we know them today, were
established around the early twentieth century.
 The Reserve Bank of India was set up on the basis of the recommendations of the
Hilton Young Commission. The Reserve Bank of India Act, 1934 (II of 1934)
provides the statutory basis of the functioning of the Bank, which commenced
operations on April 1, 1935.
 The operation of the Reserve Bank of India lies with a 21-member central board of
directors consisting of:
 Governor;
 4 Deputy Governors;
 2 Finance Ministry representatives;
 10 government-nominated directors;
 4 directors to represent local boards’ headquarters of RBI
 Regulating the nation’s currency and credit system.
 Securing monetary stability in India by maintaining reserves.
 Issuing bank notes.

 Maintaining financial stability ineffective activities and isolating itself from any
political impact.
 Ensuring economic growth and supporting planned advancement of the
country’s
economy.
 Performing the role of Banker’s bank, Banker to government, and note-issuing
authority.
 Regulate Money Supply: The Reserve Bank of India (RBI) is responsible for the control, issuing, and
maintaining supply of the Indian rupee. It also prints currency based on requirements.
 Managing Payment Systems: RBI manages the main payment system in the country and also aims to promote its
economic development.
 Insuring Deposits: RBI has established the Deposit Insurance and Credit Guarantee Corporation for the purpose
of providing insurance of deposits and guaranteeing all Indian banks credit facilities.
 Financial Supervision: RBI carries out consolidated supervision of the financial sector comprising
commercial banks, financial institutions, and non-banking finance companies.
 Banker to the Government: RBI serves as a banker to the Government of India by maintaining its
accounts, receiving payments into and making payments out of these accounts.
 Manager of Foreign Exchange:The Reserve Bank of India also facilitates external trade and payment and
promotes orderly development and maintenance of the foreign exchange market in India.
 Banker of Banks: RBI plays the role of central bank where commercial banks are account holders and can deposit
money. All scheduled banks maintain their banking accounts with RBI.
 Regulate Banking System: RBI plays the role of regulator and supervisor of the Indian banking system by
ensuring financial stability & public confidence in the banking system
 Monetary policy is adopted by the monetary authority of a country that controls
either the interest rate payable on very short-term borrowing or the money supply.
 The main objective of monetary policy is to maintain price stability while keeping
in mind the objective of growth as price stability is a necessary precondition for
sustainable economic growth.
 In India, the RBI plays an important role in controlling inflation through the
consultation process regarding inflation targeting.
 The Reserve Bank of India Act, 1934 (RBI Act) was amended by the Finance Act,
2016, to provide for a statutory and institutionalized framework for a Monetary
Policy Committee, for maintaining price stability, while keeping in mind the
objective of growth.
 Q ualitative
measures

Monetary Policy

Q uantitativ
e
measures
 Bank Rate: Also known as the discount rate, bank rates are interest charged by the RBI
for providing funds and loans to the banking system. An increase in bank rate increases
the cost of borrowing by commercial banks which results in the reduction in credit
volume to the banks and hence the supply of money declines.
 Open market operations: An open market operation is an instrument which involves
buying/selling of securities like government bond from or to the public and banks. The
RBI sells government securities to control the flow of credit and buys government
securities to increase credit flow.
 Cash Reserve Ratio (CRR): Cash Reserve Ratio is a specified amount of bank deposits
which banks are required to keep with the RBI in the form of reserves or balances. The
higher the CRR with the RBI, the lower will be the liquidity in the system and vice versa.
 Statutory Liquidity Ratio (SLR): All financial institutions have to maintain a certain
quantity of liquid assets with themselves at any point in time of their total time and
demand liabilities. This is known as the Statutory Liquidity Ratio. The assets are kept in
non-cash forms such as precious metals, bonds, etc.
 Credit Ceiling: With this instrument, RBI issues prior information or direction that
loans to the commercial bank will be given up to a certain limit. In this case, a
commercial bank will be tight in advancing loans to the public.
 The Credit Authorization Scheme (CAS): CAS was launched in 1965 and was
withdrawn in 1989. Under this scheme, all commercial banks had to obtain prior
approval / authorization of the RBI before granting a loan of Rs. 1 crore or more to a
single borrower.
 Moral Suasion: It refers to a type of influencing procedure which is applied by Central
Banks to keep the pressure on commercial banks in order to abide by the monetary
policies that are established. It is carried out by transferring speeches, seminars and
meetings.
 Reverse repo rate: It is the rate at which the central bank of a country (Reserve Bank of
India in case of India) borrows money from commercial banks within the country. It is a
monetary policy instrument which can be used to control the money supply in the
country.
 The Reserve Bank of India (RBI) faces several challenges in managing the
balance between promoting economic growth and maintaining price stability in
the Indian economy.These include:

 Inflation Management: Balancing economic growth with price stability requires the
RBI to effectively manage inflationary pressures. Inflation can erode purchasing
power and hinder economic growth.

 External Factors: External factors like global commodity prices, exchange rates,
and capital flows can impact the Indian economy. Managing these external factors
and their potential spill over effects requires careful monitoring and timely policy
responses.
 Fiscal Discipline: Coordinating with the government to maintain fiscal discipline is
crucial. Government spending and borrowing decisions can affect inflation and
interest rates. Collaborative efforts between the RBI and the government are
needed to ensure a cohesive approach to fiscal and monetary policies.

 Financial Stability: The RBI needs to maintain a stable and resilient financial system.
Balancing growth and stability requires robust regulation and supervision to
mitigate risks such as excessive credit growth, asset bubbles, and systemic
vulnerabilities.

 Digital Transformation: Embracing digital transformation and managing the risks

associated with digital payments and banking is a priority for the RBI. Ensuring
the security and efficiency of digital transactions is essential for the modernization
of the financial system.
•Prime Minister Narendra Modi has launched two customer-centric initiatives of
the Reserve Bank of India (RBI):
-The RBI Retail Direct Scheme.
-The Reserve Bank-Integrated Ombudsman Scheme. (2021)
The two schemes will expand the scope of investment in the country and make access
to capital markets easier and more secure for investors.

-C reation of the Reserve Bank Innovation Hub (RBIH)

In 2022 , the RBIH was inaugurated as a wholly owned subsidiary of the RBI.
It aims to create an ecosystem that focuses on promoting access to financial services
and products for the low income population in the country.
Centre for Financial Literacy (CFL) project: To have an exclusive focus on

financial literacy at the block level through brick and mortar centers, CFLs have
been set-up by RBI at the block level. A total of 1107 CFLs have been set up across
the country as on June 30, 2022. Awareness about digital banking is one of the
areas covered under the CFL project.

 RBI has been also carrying out multi-channel public awareness media

campaigns under the aegis of ‘RBI Kehta Hai’ by television, radio, online, SMS
and social media posts, whereby public is sensitised about how to be vigilant while
using digital products such as mobile banking, ATMs, internet banking, etc., and
how digital frauds could be averted.
Concluding the presentation , the rbi is an important regulatory body of the country and as citizens, we must recognize
the significance of the RBI's role in shaping our economy. We must hold it accountable, ensuring that its policies and
actions reflect the aspirations and welfare of all stakeholders .