Your Big Idea

A Class
Presentation
by:
Kushagra Soam
Bhuvnesh Kumavat
● The Reserve Bank of India was set up on April
1, 1935
● The bank was set up based on the
recommendations of the 1926 Royal
Commission on Indian Currency and Finance,
also known as the Hilton–Young Commission
● The Central Office of the RBI was established
in Calcutta but was moved to Bombay in
1937. The RBI also acted as Burma's central
bank until April 1947. After the Partition of
India in August 1947, the bank served as the
central bank for Pakistan until June 1948 when
the State Bank of Pakistan commenced
operations.
● In the 1950s, the Indian government, the
administration nationalised commercial banks
and established, based on the Banking
Companies Act, 1949, a central bank regulation
as part of the RBI. Furthermore, the central
bank was ordered to support economic plan
with loans
https://m.rbi.org.in/scr
ipts/chro_1935.aspx
● The national economy contracted in July 1991 as the
Indian rupee was devalued.
New guidelines were published in 1993 to establish a
private banking sector. This turning point was meant to
reinforce the market and was often called neo-liberal
The National Stock Exchange of India took the trade on
in June 1994 and the RBI allowed nationalised banks in
July to interact with the capital market to reinforce their
capital base. The central bank founded a subsidiary
company—the Bharatiya Reserve Bank Note Mudran
Private Limited—on 3 February 1995 to produce
banknotes
The Foreign Exchange Management Act, 1999 came into
force in June 2000. It should improve the item in 2004–
2005 (National Electronic Fund Transfer).[34] The
Security Printing & Minting Corporation of India Ltd., a
merger of nine institutions, was founded in 2006 and
produces banknotes and coins
Branches & Subsidiaries
● The RBI has four regional representations:
North in New Delhi, South in Chennai, East in
Kolkata and West in Mumbai.
● There are three autonomous institutions run

by RBI namely National Institute of Bank
Management (NIBM), Indira Gandhi Institute
of Development Research (IGIDR), Institute
for Development and Research in Banking
Technology (IDRBT).
● On 8 December 2017, Surekha Marandi,

Executive Director (ED) of Reserve Bank of
India, said RBI will open an office in the north-
eastern state of Arunachal Pradesh
FUNCTIONS
The central bank of any country executes many

functions such as overseeing monetary policy,
issuing currency, managing foreign exchange,
working as a bank for government and as a banker of
scheduled commercial banks. It also works for
overall economic growth of the country. The
preamble of the Reserve Bank of India describes its
main functions as:
..to regulate the issue of Bank Notes and

keeping of reserves with a view to
securing monetary stability in India and
generally to operate the currency and
credit system of the country to its
advantage.
● Regulator and supervisor of the
financial system
● Regulator and supervisor of the
payment and settlement systems
● Banker and debt manager to
government
● Managing foreign exchange
● Issue of currency
● Banker's bank
● Detection of fake currency
● Developmental role
● Custodian to foreign exchange
Policy Rates &
Reserve Ratios
● Repo rate:
Repo (repurchase) rate also known as the

benchmark interest rate is the rate at which the
RBI lends money to the commercial banks for a
short-term (a maximum of 90 days). When the
repo rate increases, borrowing from RBI becomes
more expensive.
● Reverse repo rate (RRR):
Reverse repo rate is just the opposite of repo rate.

Reverse repo rate is the short term borrowing rate
at which RBI borrows money from banks. The
reserve bank uses this tool when it feels there is
too much money floating in the banking system.
An increase in the reverse repo rate means that
the banks will get a higher rate of interest from
RBI. As a result, banks prefer to lend their money
to RBI which is always safe instead of lending it to
others
● Statutory liquidity ratio (SLR):
banks are required to maintain liquid assets in the

form of gold, cash and approved securities. Higher
liquidity ratio forces commercial banks to maintain a
larger proportion of their resources in liquid form
and thus reduces their capacity to grant loans and
advances, thus it is an anti-inflationary impact. A
higher liquidity ratio diverts the bank funds from
loans and advances to investment in government
and approved securities.
● Cash reserve ratio (CRR):
CRR refers to the ratio of bank's cash reserve

balances with RBI with reference to the bank's net
demand and time liabilities to ensure the liquidity
and solvency of the scheduled banks
● Open market operation (OMO):
Open market operation is the activity of buying and

selling of government securities in open market to
control the supply of money in banking system. When
there is excess supply of money, central bank sells
government securities thereby sucking out excess
liquidity. Similarly, when liquidity is tight, RBI will buy
government securities and thereby inject money
supply into the economy.
● Margin requirements:
Loan-to-value (LTV) is the ratio of loan amount to the

actual value of asset purchased. The RBI regulates
this ratio so as to control the amount a bank can lend
to its customers.
Thank you!
We hope you’ll use these tips in your academic
bubble
For more on RBI:
https://d-nb.info/1138787981/34
http://www.rbi.org.in/home.aspx
https://www.thehindubusinessline.com/opinion/colu
mns/slate/all-you-wanted-to-know-about-monetary-p
olicy-committee/article8807786.ece

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A Class

● There are three autonomous institutions run

● On 8 December 2017, Surekha Marandi,

The central bank of any country executes many

..to regulate the issue of Bank Notes and

Repo (repurchase) rate also known as the

● Reverse repo rate (RRR):

Reverse repo rate is just the opposite of repo rate.

banks are required to maintain liquid assets in the

● Cash reserve ratio (CRR):

CRR refers to the ratio of bank's cash reserve

Open market operation is the activity of buying and

Loan-to-value (LTV) is the ratio of loan amount to the

For more on RBI:

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