RESERVE BANK

OF INDIA

Reserve Bank of
India RBI
PRESENTING BY :

C. SREEJA
V.AKSHITHA
R.SAI SHRUTHAN
V. DEEPIKA
UMAR FAROOQ
 INTRODUCTION TO RBI

RESERVE BANK OF INDIA

• The Reserve bank of india (RBI) is the central banking institution

of india, responsible for regulating the country’s monetary policy
and financial system.

• As the apex banking authority, the rbi plays a crucial role in

maintaining economic stability and growth.

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 Milestones in RBI's Histor
Foundation of RBI Innovations in Banking

Established in April 1935 Introduced digital trends for

for stability. financial inclusion.

Regulatory Reforms
Independence of RBI Implemented
Became independent in Strengthened policies for banking
January 1949 for sector growth.
governance.
 ROLES AND RESPONSIBILITIES
• Monetary Authority :
RBI formulates and implements India's monetary policy, aiming to maintain
price stability and ensure the adequate flow of credit to productive sectors
of the economy.

• Issuer of Currency :
The RBI is the sole issuer of currency notes in India, except for one-rupee
coins and notes, which are issued by the Government of India.

• Regulator of Foreign Exchange :

Foreign Exchange Management: The RBI regulates foreign exchange
transactions and manages the exchange rate to ensure a stable external
sector.

• Regulation of Non-Banking Financial Companies (NBFCs) :

The RBI regulates and supervises Non-Banking Financial Companies
(NBFCs) to ensure their sound operation and protect investors and 4
FUNCTIONS OF RBI
• Issue of currency :
The RBI is the sole authority for the issue of currency in India other than one rupee coins and notes and also subsidiary
coins.

• Controller of credit :
It is generally considered to be the principal function of central bank. Not only RBI, like any other central bank possess
power to use almost all qualitative and quantitative methods of credit control.

• Collection of Data :
It has been entrusted with the task of collection and complication of statistical information relating to banking and
other financial sectors of economy.

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Monetary regulation and management :
Monetary policy is a set of tools used by a nation’s central bank to control the overall money supply and
promote economic growth.
• Employ strategies such as revising interest rates and changing bank reserve requirements.

Banker to the government :

o It transacts all the general banking business of the central and state government.
o It manages public debt and is responsible for issue of new loans.

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 Organizational Structure Governance
Central Board of Directors

• The Central Board of Directors is the highest decision-making body of the RBI.
• It oversees the overall functioning and policies of the RBI.

Regional Boards

• Four regional boards are located in Mumbai, Kolkata, Chennai, and New Delhi.
• Role: Advise on local economic and banking-related issues.

Regional Offices

• The RBI operates 31 regional offices and sub-offices across India to manage local
financial systems, banking supervision, and currency distribution.

Committees

RBI often forms expert committees to focus on specialized areas, such as:
• Financial inclusion.
• Digital payments systems.
• Banking
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sector reforms. Pitch Deck 7
Regulatory bodies of RBI :
Department of Regulation (DoR)
• Regulates commercial banks, cooperative banks, and non-banking financial
companies (NBFCs)

Department of Supervision (DoS)

• Supervises banks, NBFCs, and cooperative banks to ensure financial stability.

Board for Financial Supervision (BFS)

• Established in 1994 as part of the RBI.
• Focuses on strengthening the supervisory and regulatory framework.

Foreign Exchange Department (FED)

• Administers the Foreign Exchange Management Act (FEMA), 1999.
• Regulates external trade, payments, and foreign exchange transactions.

Financial Inclusion and Development Department (FIDD)

• Promotes financial inclusion by regulating priority sector lending and rural
banking.
 Monetary Policy and Its Objectives

 It is the set of actions undertaken by a country's central bank, such as the Reserve
Bank of India (RBI), to manage money supply, credit, and interest rates in the
economy.

 It is a key tool for achieving macroeconomic stability and growth.

 Objectives of Monetary Policy :

Repo Rate:
• Rate at which the RBI lends money to commercial banks.
• Lowering the repo rate boosts liquidity; raising it reduces liquidity.
• The latest RBI current Repo Rate is 6.50% in India (October 2024) as per the
Reserve Bank of India (RBI). This was last increased on 8th February 2023 by 25 basis
points (or 25bps).

Reverse Repo Rate:

• Ratereverse
Current at which banks
repo ratepark
is attheir
3.35%surplus funds with the RBI.
• Used to manage excess liquidity in the banking system.

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Statutory Liquidity Ratio (SLR):
• Percentage of NDTL that banks must maintain in the form of cash, gold,
or government-approved securities.

• Used to control credit and ensure liquidity

• Statutory Liquidity Ratio or SLR is the minimum percentage of deposits

that a commercial bank has to maintain in the form of liquid cash, gold
or other securities.

Cash Reserve Ratio (CRR):

• Percentage of a bank’s net demand and time liabilities (NDTL) that
must be maintained with the RBI.
• Higher CRR reduces money supply; lower CRR increases it.
• Currently, the CRR is fixed at 4.50%. This means that for every Rs
100 worth of deposits, the bank has to keep Rs 4.5 with the
RBI.

Bank Rate:
• Long-term rate at which the RBI lends money to banks without
collateral.
• Higher bank rate discourages borrowing; lower rate encourages it. 10
• As announced in the Monetary Policy Statement 2022-23 dated May 04,
Payment Systems and Digital Banking in India :

Unified Payments Interface (UPI)

 Supported by apps like PhonePe, Google Pay, Paytm, and BHIM.
 Prepaid Payment Instruments (PPIs).

Bharat Bill Payment System (BBPS)

 Centralized platform for bill payments (e.g., utilities, telecom, taxes).

Digital Banking Apps

 Banks provide apps with features like fund transfers, bill payments, and investment options
(e.g., YONO by SBI, ICICI iMobile).

Aadhaar-Enabled Payment System (AePS)

 Allows basic banking transactions using Aadhaar numbers and biometric verification.

National Electronic Toll Collection (NETC)

FASTag: Enables automatic toll payments through RFID technology.
Challenges Faced by the RBI

Inflation Control :
• Balancing inflation within the target range (2%-6%) while
ensuring adequate economic growth is a persistent
challenge.

Financial Stability Risks :

• The rise of Non-Banking Financial Companies (NBFCs)
and shadow banking poses systemic risks.

Currency and Forex Management :

• Maintaining adequate foreign exchange reserves and
ensuring the rupee’s stability amid high import
dependency.

Public Sector Bank Performance :

• High non-performing assets (NPAs) in public sector banks
continue to challenge financial stability.

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 CONCLUSION

 The Reserve Bank of India (RBI) plays a pivotal role as the central
bank of India, acting as the guardian of monetary policy, financial
stability, and economic growth.

 The RBI is not just a regulatory authority but a cornerstone of India's

economic
foundation, ensuring stability, fostering innovation, and promoting
inclusive in an growth increasingly interconnected and evolving
financial ecosystem.
 SOURCES

RBI - Reserve Bank of India [UPSC Indian Economy Notes]

Complete RBI Repo Rate History in India (2000 to 2024) - Stable Investor

Cash Reserve Ratio (CRR) - Definition & Formula

Statutory Liquidity Ratio (SLR) - Definition, Objective & Impact

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THANK YOU