defination, procees, working everything is in detail

1. Reserve Bank of India
The reserve of India is at the heart of the banking
system being a central bank, it occupies a pivotal
position in the Indian money market. It is an ‘Apex”
institution and hence acts as guardian of the Indian
money market. It was stared on April1 1935.
originally the Bank was constituted as a
shareholders’ bank with a share capital of Rupees
five crores. This capital has remained unchanged
up to this day. The Reserve Bank of India came to
be nationalized on January 1, 1949 under the
Reserve Bank Act of 1948 .

2. Administration and
Management
• Entire affairs of the RBI are administered and managed
by a central board of Director
The Board consist 1) A Governor,2) 4 Deputy Governors,
3) 4 Directors nominated by each of local boards, 4) Ten
directors from the various fields 5) one government
official from the ministry of Finance.- All nominated by
the central government.
The administration of the bank is further bifurcated in
terms of regional areas. Like Bombay, Calcutta, Madras,
and New Delhi and five member appoint by the central
govt. to regional areas

3. The chairman and the chief executive
authority of the Reserve Bank of India is the
Governor. The Governor is assisted in
performance of his duties by four deputy
Governors and three executive directors.
Meeting of the central board are held for not
less than six times in each year, at least once
in quarter

4. Governor
Dy. Governor Dy. Governor Dy. Governor Dy. Governor
Executive Executive Executive
Director Director Director
Chief Manager
Chief Accountant

5. Organization of the RBI
• Its Divided into two parts
• A) Internal Organization b) External organization
• The internal organization refers to the central
office of the bank which is divided into a number
of departments for the efficient functioning of the
bank.
• The external organization of the bank pertains to
its local offices situated at important metropolitan
cities of India

6. Role of RBI
• Reserve bank of India, being the central Bank of our country, performs
all the central banking function.
1) Bank of Issue:
RBI in the first instance acts as a Bank of issue under section 22 of the
RBI act, the bank has the sole right to issue the bank note in india. The
RBI issue note of all denomination except on rupee notes. The one rupee
note is considered to be a coin printed on a paper, and hence is issued
by the ministry of finance, govt. of India. For performing this function
more efficiently the RBI has a separate department known as the issue
department.
2) Banker to the government:
The RBI of India also acts as a banker to the government. Under section
20,21, and 21 A of the RBI act, the bank performs this function. It acts as
an agent, adviser and a banker to the government . The central as well
as the state government maintain their accounts with the RBI. In the
absence of the RBI the government maintain the account with its agent
the state of bank of India and it subsidiaries.

7. 3) Bankers bank:
The RBI like all other central banks also acts as the bankers bank.
The development of an adequate and sound banking system to cater to the
needs of trade, commerce, industry and agricultural is an additional
responsibility fo the RBI besides the performance of it traditional function. The
RBI act 1934 and the banking regulation act of 1949 have given the extensive
and sweeping power to RBI to supervise and control the commercial and co
operative banks in India.
4) Custodian of Foreign exchange Reserve:
The RBI acts as custodian of our foreign exchange reserve. It is
entrusted with the task of maintaining the external value of the rupee. The RBI
a very strict control over the foreign receipts and payments. The RBI has a
separate ‘Exchange control programme ‘ to supervise and control the scarce
foreign exchange.
5) Controller of credit
The most outstanding function of the RBI is to control the credit made
available by the entire banking system. This function is preformed by the RBI
through the formulation and execution of the monetary policy.
1) Bank rate exchange.
2) Open money market operation
3) credit control
6) Promotional function :
to establishment of new specialized agencies, opening new branch,
new bank interest rate. etc.

8. Function of RBI
• To maintain monetary stability so that the
business and economic life can deliver
welfare gains of a properly functioning
• TO maintain financial stability and ensure
sound financial institutions so that
monetary stability can be safely pursued
and economic units can conduct their
business with confidence .
• To maintain stable payment system so
that financial transactions can be safely
and efficiently executed.

9. Cont..
IV) To promote the development of financial
infrastructure of markets and systems, and to
enable it to operate efficiently ie to play a leading
role in development a sound financial system so
that it can discharge its regulatory function
efficiently
V) To ensure that credit allocation by the financial
system broadly reflects the national economic
priorities and social concerns
VI) To regulate the overall volume of money and
credit in the economy with a view to ensure a
reasonable degree of price stability.

10. Meaning of Commercial Bank
An institution which accepts deposits,
makes business loans, and offers related
services. Commercial banks also allow for a
variety of deposit accounts, such as
checking, savings, and time deposit. These
institutions are run to make a profit and
owned by a group of individuals, yet some
may be members of the Federal Reserve
System. While commercial banks offer
services to individuals, they are primarily
concerned with receiving deposits and
lending to businesses.

11. Types of Commercial Banks
Central Bank:
Central bank of a country is the leading statutory institution in
the money market of a country which acts as a leader of the
money market, supervising, controlling and regulating the
activities of commercial banks and other financial institutions
Commercial banks :
A commercial bank is a financial institution which accepts
deposits against which cheques can be drawn, lends money
to industry, trade and consumers and renders number of other
services useful to the entire community.
Industrial Banks:
They provide medium and long terms loans and supply fixed
capital to the industrial concerns by subscribing to the shares
and debentures of the industrial enterprises. They promote
new industrial concerns and provide technical guidance in the
management.

12. Exchange Banks:
They are a type of commercial banks which primarily engage in
transaction involving foreign exchange . They specialize in
financing import and export trade in foreign exchange transaction.
Co-Operative Banks:
These banks are institutions formed on the basis of co-opeation to
extend credit facilities to farmers . They accept money on deposits
and make loans to the members at low rate of interest
Agricultural Land Mortgage Banks:
These banks provide term credit to agricultural against the
security of their land for purchasing tools and implements, cattle
and for financing permanent improvements with a view to increase
yield from land.
Indigenous Banks:
These are unrecognized operations in receiving deposits and
lending money. These banks comprise chetties in Madras, Sriram
chetties etc. they receive deposits and deal in hundis, finance
trade and industry and lend money.

13. Function of Commercial Banks:
1.Accepts of Deposit:
Fixed deposit Account
Current Account
Saving bank account
2.Advancing of Loans:
Making ordinary Loans
Cash credit
Overdraft
Discounting of bills of exchange
3.Promote the use of cheque
4.Agency functions of the Bank
Transfer of funds
Collecting customers funds
Purchasing and sale of share and securities for its customers
Collecting dividends on the shares of the customers.
Payment of premium
The bank acts as the trustee and the executors
Income – tax consultant
5. Purchases and sale of foreign exchange
6.Financing internal and foreign trade
7.Other function of the Bank
Safety custody of valuable goods

14. Issuing of traveler's cheque
Giving information about its customers
Collection of statistics
Underwriting of company debenture
Accepting bills of exchange on behalf on customers
Giving advise on financial matters.