rbi study

Topics: Monetary policy, Bank, Central bank Pages: 13 (4259 words) Published: September 19, 2014
Study Material
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RBI Assistants
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Grade B Officers
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RBI : A Brief Introduction

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RBI (Reserve Bank of India), India's Central Bank came into existence on 1stApril 1935 as a private share holders bank.

Functions of RBI :
Monopoly of Note issue
Banker, Adviser and Agent to the Govt. of India
Banker to Banks
Custodian of Foreign exchange and gold.
Re-discounts bills of exchange and hundis.
Lender of last Resort
Maintains stability of foreign value of Rupee.
Acts as clearing house
Credit control

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RBI's central office is in Mumbai.
RBI has 22 regional offices.
It was nationalized on 1st January 1949.
It prints Currency in 15 Languages.
Its predecessor was Imperial Bank of India (1921).
RBI came into existence on the recommendation of Hilton Young (Royal) commission as per RBI act 1934.
It is the member bank of Asian Clearing Union (ACU) and IMF (International Monetary Fund).
The general superintendence and direction of the RBI is entrusted with the 21-memberstrong Central Board of Directors—the Governor (currently Duvvuri Subbarao), four Deputy Governors, two Finance Ministry representative, ten government-nominated directors to represent important elements from India's economy, and four directors to represent local boards headquartered at Mumbai, Kolkata, Chennai and New Delhi. Each of these local boards consists of five members who represent regional interests, as well as the interests of co-operative and indigenous banks.

The present Governor of RBI is Duvvuri Subba Rao (Second Time). Deputy Governors :
 K.C.Chakravarthi
 Urjit Patel
 Anand Sinha
 Harun Rashid Khan.

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Key points to Note :

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Note : 1st Central Bank in the world : Rick's Bank Sweden in 1656. But in the light of unctions, Bank of England is the 1st Central Bank 1694.

Study Material for RBI Assistants and Grade B Officers – Powered by www.Gr8AmbitionZ.com

Important Points you should Keep in Mind

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Bank Rate

Bank rate, also referred to as the discount rate, is the rate of interest which a central bank charges on the loans and advances that it extends to commercial banks and other financial intermediaries. Changes in the bank rate are often used by central banks to control the money supply. Present Bank Rate – 8.25 %

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Currency notes are issued by RBI under "Minimum Reserve System 1957" with backing of Rs. 200 Cr Reserve (Gold : Rs. 115 Cr + Foreign Securities Rs. 85 Cr) RBI Invests foreign exchange reserves in multi-currency, multi-market portfolios such as securities, other central banks and Bank of International Settlements (BIS) and deposits in foreign commercial banks. The yield on such investments is low. RBI does not pay interest on Govt. deposits with it.

The following monetary instruments are in the hands of RBI to control credit and to bring economic stability in the economy :
o Bank Rate : Rate of rediscount at which the RBI discounts the first class bills of exchange brought by the banks.
o Repo Rate : Injection of liquidity by the RBI is termed as " Repo Rate" . This was introduced in Dec. 1992 and Reverse Repo Rate in Nov. 1996. RBI buys Govt. Securities for a short period usually a fortnight, with an agreement to sell it later. Thus repo rate is a short-term money market instrument to stabilize short term liquidity in the economy.

o Reverse Repo Rate
 Repo Rate is the rate at which the RBI lends to commercial banks where...
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