Professional Documents
Culture Documents
Helping both Central and State Govts to float new loans and mange
public debt.
Its the rate at which the banks park surplus funds with reserve
bank.
While the Repo rate is the rate at which the banks borrow from
the central bank.
4. Publicity:
The central bank may resort to massive advertising campaign
in the news papers, magazines and journals depicting the
poor economic conditions of the country suggesting
commercial banks and other financial institutions to control
credit either by expansion or by contraction.
MONETARY POLICY
RBI controls the supply of money
in the economy by its control
over interest rates in order to
maintain price stability and
achieve high economic growth
using Monetary Policy.
Main Aim of Monetary Policy is
to (SBI PF)
1. Stabilise exchange rate
4. Control inflation
CONTD....
5. Strengthen Banking System
MONETARY AUTHORITY (CONTD...)
Quantitative Measures of Credit Control
under Monetary Policy :
Bank Rate : Rate at which RBI discounts
bills of commercial banks.
Cash Reserve Ratio (CRR) : Portion of
Deposit which commercial banks have to
keep with RBI in the form of Cash
Reserves.
Statutory Liquidity Rate (SLR): Portion of
Total Deposit which commercial banks have
to maint in the form of Liquid Assets viz
Gold, Cash or Approved Government
securities.
Repo Rate : Rate at which Commercial
Banks borrow money from RBI.
Reverse Repo Rate : Rate at which RBI
borrows money from Commercial Banks.
LENDER OF LAST RESORT
The banks can borrow
from the RBI by keeping
eligible securities as
collateral or any other
arrangement and at the
time of need or crisis,
they approach RBI for
financial help. Thus RBI
works as Lender of the
Last Resort (LORL) for
banks.
BANKER & DEBT MANAGER OF GOVERNMENT
Keeps deposits of Governments (Centre & state) as deposit free
of interest.
Receives & Makes Payment on behalf of Government.
Carrying out the Governments exchange remittances & other
Banking Operations.
Helping Both State & Central Government to float new loans
and manage public debt.
Acts as an Advisor to Government on all monetary & Banking
functions
ACTS AS CLEARING HOUSE
Clearing Houses facilitate the exchange of instruments and
processing of payment instructions at a central point among
the participating banks.
RBI acts as a Clearing House for settlement of Banking
transactions.
It is a member bank of the Asian Clearing Union.
RBI manages 14 clearing houses of the country situated in
different major cities. The SBI & Associate Banks look after
clearing house function as an agent of RBI.
SUMMARY
The Reserve Bank of India (RBI) is India's Central
bank & apex bank in Indian banking system.
Commenced business on 1st April 1935 in accordance
with the provisions of the Reserve Bank of India Act,
1934.
It Plays an important role in strengthening,
developing and diversifying the countrys economic &
financial structure.
SUMMARY (CONTD...)
ROLE OF RBI IN INDIAN BANKING SYSTEM :
1. MONETARY AUTHORITY.
2. ISSUER OF CURRENCY.
3. ISSUER OF BANKING LICENSE.
4. BANKERS BANK.
5. LENDER OF LAST RESORT.
6. BANKER & DEBT MANAGER OF GOVERNMENT.
7. CONTROLLER OF CREDIT.
8. ACTS AS CLEARING HOUSE.
9. MANAGER OF FOREX