8/12/2019 Reserve Bank of India - Intro, Functions, Glossary,
Monetary Policy, Banking Ombudsman - Www.indianjobguru.in
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(Its highly useful for all aspirants)
RESERVE BANK OF INDIA
- Reserve Bank of India (RBI) is the central bank of the country
and apex institute of India which
monitors and regulates the monitory policy of India
- The RBI was established in the year of 1935 1 st April by
British government under the provisions
of RBI Act, 1934
- Reserve Bank of India was nationalized on 1st Jan, 1949
- RBI s governing body consists of 21 member-central board of
directors
- It Controls the monitory policy of the Indian rupee
- The RBI has 4 zonal, 19 regional and 9 sub offices in the
country
MAIN FUNCTIONS OF RBI
1. Issue of Notes It has monopoly of note issue in the country
& It adopted Minimum Reserve
System for the note issue
2. Banker to the Government RBI acts as an advisor, agent,
banker to the Government & It
provides loan to the Government by bonds
3. Banker of Banks Banks holds accounts in RBI and deposits
money. RBI lends money to the
banks at certain interest rate and it borrows from bank too.
4. Controller of Credit It undertakes the responsibility of
controlling credits created by the
commercial banks
5. Custodian of Foreign Exchange Managing the foreign exchange
to facilitate external trade
and payment
6. Monetary Authority It formulates, implements and monitors the
monetary policy and it
ensure the adequate flow of credit to all sectors in the
country
IMPORTANT RBI TERMINOLOGY
1. Bank Rate A bank rate is the interest rate at which RBI lends
money to the commercial
banks
2. Repo Rate An interest rate at which banks borrows money from
Reserve bank of India
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8/12/2019 Reserve Bank of India - Intro, Functions, Glossary,
Monetary Policy, Banking Ombudsman - Www.indianjobguru.in
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MONETARY POLICY
- Monetary Policy is policy framed, regulated and monitored by
RBI
- It involves controlling the supply of money in economy to
maintain price stability and higher
economic growth - Control measures to regulate money supply
are
1. Open market operations
2. Cash Reserve ratio (CRR)
3. Statutory Liquidity ratio (SLR)
4. Repo rate
5. Reverse repo rate
6. Bank rate policy
7. Marginal Standing Facility (MSF)
- Main aim of monetary policy is to 1. Control the inflation
2. Stabilize the prices
3. Stabilize the exchange rate
4. Promote economic growth
5. Control the money supply
6. Control the interest rate of loans by banks so people can
improve their livelihood and
industrial growth
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