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RBI (Reserve Bank of India)
ESTABLISHMENT
ü RBI
is the Central Bank (Apex Bank)
ü The
RBI was established on the recommendations of Royal Commission on Indian
currency and Finance also called Hilton-Young Commission.
ü The
Reserve Bank of India Act was passed in the year 1934
ü In
accordance to RBI Act of 1934, the RBI was set up in the year 1935
ü The
RBI commenced its operations on April 1st, 1935
ü The
first Governor of RBI was Sir Osborne Smith
ü The
first Indian to be the Governor is Sir Chintaman Deshmukh
ü The
current Governor is Raghuram Rajan
ü After
the independence in 1947 it also acted as the Central bank for Pakistan up to
June 1948.
ü Note:
In 1948 Pakistan set up its own Central Bank called State Bank of Pakistan
ü The
RBI was originally a private bank (share holders) and it was nationalised with
effect from January 1st, 1949 on the basis of RBI (Transfer to
Public Ownership) Act 1948.
ü Up
to 1960s RBI also played an important role in the development also especially
in agriculture.
ü Various
institutions like UTI, IDBI, NABARD etc were set because of RBI
ü With
economic reforms in 1990s the it started focusing on its core functions like
monetary policy bank regulations, development of financial market and payment
systems
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LOCATION
ü Originally
set up in Calcutta (Kolkata) and shifted to Bombay (Mumbai) in the year 1937
RTI (Right to information Act)
ü The
Parliament has enacted RTI Act in the year 2005.
ü The
RTI Act came into effect on October 12, 2005
ü The
RTI Act empowered the citizens to access the information under the control of
public authorities to promote transparency and accountability in these
organisations. The act provided for the appointment of Chief Public Information
officer to deal with the request for such information.
ü RBI
is a public authority and it provides the information
ü In
RBI the chief Information officer is called Transparency officer
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FUNCTIONS:
ü The
functions are described in the Preamble of RBI
ü It
regulates the issue of bank notes and keeping the bank reserves to secure
monetary stability.
ü It
operates the currency and credit system of the country
What is
monitory policy?
ü This
is evolved under three objectives
ü Maintaining
price stability
ü Ensuring
adequate flow of credit to sustain the growth momentum
ü Securing
financial stability
ü It
is the banker to the government
ü Manages
public debt
ü Banker
to banking system
ü Lender
of the last resort
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HOW RBI OPERATES?
ü It
operates through the central board governed by board of directors
ü The
directors are appointed by the government
ü They
are categorised into official and non-official directors
ü There
are 4 local boards in the country located in Mumbai, Kolkata, Chennai and New
Delhi
ü There
are 19 regional offices of RBI located in different states
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Main functions of RBI:
ü Monetary
Authority: formulates and implements the monetary policy
ü Regulator
and supervisor of the financial system: prescribes the broad parameters of
banking operations within which the country’s banking and financial system
functions
ü Manager
of foreign exchange: Manages Foreign Exchange Management Act (FEMA) 1999.
ü Issuer
of currency: issues and exchanges or destroys currency and coins that are not
fit for circulation
ü Banker
to the government:
ü Banker
to the banks: Maintains banking accounts
ü The
RBI based on the demand requirement indicates the volume and value of bank
notes to be printed each year and after mutually agreed by the GOI it prints
the new notes. It depends on the requirement of meeting the demand for the bank
notes, GDP growth, replacement of soiled notes and reserve stock requirements.
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BANKING OMBUDSMAN:
ü It
was introduced in the year 1995
ü This
is a senior official appointed by the RBI to redress the customer complaints
against deficiency of certain banking services.
ü As
of now 15 ombudsman appointed in various state capitals
COINS:
ü Coins
up to 50 paise are called smaller coins
ü Rs
. 1/- and above are called rupee coins
ü Coins
like 1, 2, 3, 5, 10 and 25 paise have been withdrawn from the market
ü As
per Indian coinage act, 2011 the RBI can mint up to Rs. 1000/- coin
ü The
designing and minting the coins is the responsibility of the GOI
ü The
coins are minted at Mumbai, Hyderabad, Noida and Kolkatta
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CURRENCY:
ü Indian
currency is called Indian rupee
ü These
notes are called bank notes
ü The
current denominations are 10, 20, 50, 100, 500 and 1000 notes
ü As
per the RBI Act, 1934 it can print up to Rs. 10000/- notes
ü The
highest denomination that was printed in India so far was Rs. 10000/- in the
year 1938 and 1954
ü Rs.
1000/- and 10000/- notes that were in circulation were demonetized in the year
1946 to curb unaccounted money
ü Rs.1000/-,
5000/- and Rs. 10000/- currency notes were reintroduced in the year 1954 and
again demonetized in the year 1978.
ü Rs.
1/- currency notes were printed under currency ordinance, 1940
ü Design
of the currency notes need to be accepted by the government on the
recommendation of central board
ü The
currency paper is made of cotton and cotton rag
ü Notes
are printed in Nashik (Maharashtra), Dewas (MP), Mysore (Karnataka)and Salboni
(West Bengal)
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CURRENCY CHEST:
ü These
are store houses of currency and the coins
ü There
are 4209 currency chests in India
ü They
distribute currency notes and coins to other branches
LANGUAGE PANEL:
ü This
is a place where the languages are printed
ü There
are 15 languages printed
ü On
the reverse side it is in English language
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BANK NOTES:
ü The
first banknote that was introduced in India after independence is the Rs. 1/-
in the year 1949
ü Symbol
of Lion Capital of Ashoka pillar at saranath replaced the portrait of King
George
ü In
the year 1996 Mahatma Gandhi series was started and it was extended to all the
currency notes.
ü Now
each currency note will have a water mark and also the portrait of Gandhi and
the Ashok Pillar was shifted to the left lower corner
OVI:
ü It
stands for optically variable ink
ü This
is a colour shift ink used for security purpose
ü When
kept flat the numerals appear in green but at an angle it appears black
CLEAN NOTE POLICY OF RBI:
The
people are requested
ü Not
to staple the bank notes
ü Not
to write on the notes
ü Not
to rubber stamp
ü Not
to use bank notes to make garlands/toys
ü Not
to decorate pandals/places of worship
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PAPER THAT IS USED FOR
CURRENCY IN INDIA:
ü So
far India is importing the paper from countries like Japan and Australia.
ü Estimates
says that it is costing Rs.1800/ crore to 2400/- crore each year
ü In
the year 2015 India is going to have its own paper for printing currency.
ü A
special making facility is being set up in Mysore a joint venture project
involving the Security Printing and Minting Corporation of India Ltd and the
Bharatiya Reserve Bank Note Mudran Private Limited which is a subsidiary of
RBI.
ü It
is also planning to print currency notes in plastic and polymer.
ü Note:
Australia and New Zealand are already using the polymer notes
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