More Related Content
What's hot (20)
Viewers also liked (20)
Similar to CENTRAL BANK (RBI) (20)
Recently uploaded (20)
CENTRAL BANK (RBI)
- 1. RBI BY DHERAJ RAHIM
- 2. Points covered Central bank- Meaning, Definitions Origin, History & Structure Functions Monetary policies & objectives Qualitative & Quantitative Policies Conclusion
- 3. Central Bank “ A central bank is a lender of last resort” -- Prof.Hawtry “ It is a bank of banker” -- Samuelson “ Bank which has monopoly over note issue” -- Vera Smith “ Central bank is the government’s bank” -- Sayers
- 4. Central banking “ An institution charged with the responsibility of managing the expansion and contraction of the volume of money in the interest of general public welfare” Prof.Kent “ One which constitute the apex of the monetary and banking structure of its country” Prof.M.H.De Kock
- 5. RBI and its origin Commenced Operations on 1 st April 1935 as per The Reserve Bank of India Act, 1934 (II of 1934) and Nationalise on 1 st Jan 1949. To regulate the issue of banknotes To maintain reserves with a view to securing monetary stability and To operate the credit and currency system of the country to its advantage.
- 6. Structure of Banking in India Reserve Bank Commercial Bank Co-operative Bank -Public Sector Bank -State Co-op bank -Private Sector bank -Central Co-op Bank -Regional Rural Bank -Primary Co-op Soc
- 9. Functions of RBI Bank of Note issue The Government’s Bank Banker’s Bank Custodian Foreign Exchange Reserves for country Lender of last resort and bank of rediscounting. Controller of credit
- 10. Monetary Policy “ Monetary policy is essentially a programme of action undertaken by central bank, to control and regulate the supply of money with the public and flow of credit with a view of achieving predetermined macroeconomic goals.” -Macroeconomics-Theory & policy-D.N.Dwivedi-Tata Magraw Hill comp,
- 11. Instruments of Monetary Policy (Economic variables) Weapons of Monetary controls Nuts & Bolts of Monetary policy -- Samuelson & Nordhaus Quantitative credit control (General credit control) – Control of quantity or volume of money Qualitative credit control ( Selective credit control) – Quality /Purpose/Direction of credit control
- 12. Objectives of Credit Control To stabilise internal price level To stabilise the rate of foreign exchange To protect the outflow of gold To control business cycles To meet business needs To have growth & stability
- 13. Credit Control Measures Quantitative Qualitative -Bank Rate -Marginal Requirement -Open Mkt. Operations -Rationing of Credit -Variation in C R R -Cost. Credit Regulation -S L R -Issue of Directives -P L R -Moral Suasion -Publicity -Direct Action
- 14. Terms CRR Cash Reserve Ratio is the percentage of bank deposits (reserves and surplus) which are statutorily parked with the RBI as reserve. SLR Statutory Liquidity Ratio it is the proportion of total deposits which banks are required to maintained in liquid form of cash reserve, gold and government bond in addition to CRR to prevent commercial banks from liquidating assets when CRR is raised.
- 15. Terms Prime Lending Rate (PLR) is that rate of interest at which a bank lends to its best customers. Repo Rate is the rate at which the RBI buys government securities from the market to infuse liquidity in the system Reverse Repo rate is the rate at which the RBI absorbs excess bank funds by selling government securities in the market.
- 16. As on date prevailing Rates of Quantitative Measures CRR- 8.50% SLR – 25% PLR – 12.75 -13.25% Source- RBI website
- 17. Cash Reserve Ratio and Interest Rates (per cent per annum) Item / Week Ended 2007 2008 Jul. 13 Jul. 11 C R R (per cent) S L R (per cent) 6.50 25.00 8.50 25.00 P L R (per cent) 12.75-13.25 12.75-13.25 (1) CRR & SLR relates to Scheduled Commercial Banks (excluding Regional Rural Banks). (2) Prime Lending Rate relates to five major Banks. (3) Data cover 90-95 per cent of total transactions reported by participants. Source- RBI website
- 18. Prime Lending Rates as on 9 th July 2008 for different loans Personal Loan 15.00% / 17.50% Home Loan 11.00% / 11.50% 12.00% / 12.50% Short Term Edu. Loan 13.00% / Doctor Loan 14.00% / Two Wheelers Loan 11.50% / Car Loan 12.50% / 13.00% 13.50% General Credit Card 16.00% / 17.00% Source- RBI website
- 19. Credit Control Measures Quantitative Qualitative -Bank Rate -Marginal Requirement -Open Mkt. Operations -Rationing of Credit -Variation in C R R -Cost. Credit Regulation -S L R -Issue of Directives -P L R -Moral Suasion -Publicity -Direct Action
- 20. Difference Between Qualitative & Quantitative. Quantitative Total Volume or Quantity of Money It controls credit indirectly Lenders are controlled not the borrowers It is known as general credit control Instruments used are bank rate, open mkt. oprt., CRR etc Qualitative Quality or use or purpose of credit It controls credit directly Lenders and borrowers both are influenced It is known as selective credit control Instruments are variations in marg req, Consumer credit regl, direct action etc
- 21. Difference between Central and Commercial Bank Central Bank It is apex institution of monetary systems It is owned by government It is non profit org. It is banker and agent to government It controls credit created by commercial banks It has monopoly to note issue It has no competition There is only one central bank in economy Commercial Bank It is operating as per guideline of central bank It owned by private sector or government It is a profit seeking org. It is banker and agent to public It creates credit It has no power to issue credit There is a competition among themselves. Commercial banks are many in number
- 22. Current Focus Supervision of financial institutions Consolidated accounting Legal issues in bank frauds Divergence in assessments of non-performing assets and Supervisory rating model for banks. Source- RBI website
- 23. Conclusion Central bank plays important role in achieving economic growth of a developing country. It promotes economic growth with stability. It helps in attaining full employment of resources, in overcoming balance of payment disequilibrium & in stabilizing exchange rates.
- 24. Bibliography Website : Reserve bank of India Macro-economics Theory- M.L.Jhingan , 11 th edition, Vrinda Publication pg 317-344 Macroeconomics- Theory & Policy – D. N. Dwivedi , Tata McGraw-Hill comp. pg 527-542 Economics – Naik & Swaminathan