Tài liệu Reserve Bank of India: Functions and Working doc

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Contents
S. No. Chapters Page No.
1 Overview 7
2 Organisation 12
3 Monetary Management 21
4 Issuer of Currency 27
5 Banker and Debt Manager to Government 32
6 Banker to Banks 35
7 Financial Regulation and Supervision 38
8 Foreign Exchange Reserves Management 52
9 Foreign Exchange Management 55
10 Market Operations 60
11 Payment and Settlement Systems 63
12 Developmental Role 67
13 Research and Data Dissemination 76
14 How Departments Work 79
15 Chronology of Important Events in the History of the Bank 107
Annex - 1 Publications by the Reserve Bank 112
Annex – 2 List of Abbreviations 114
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Index on Boxes
S. No. Name of the Box Item Page No.
1 Origins of the Reserve Bank of India 8
2 Functions of the Reserve Bank 8
3 Central Office Departments 15
4 Monetary Policy Transmission 24
5 Currency Unit and Denomination 28
6 Banker to Banks 36
7 Prudential Norms 41
8 Investment of Reserves 53
9 Foreign Exchange Reserves Management: The RBI’s Approach 54
10 Payment and Settlement System: Evolution and Initiatives 64
11 Institutions to meet Needs of the Evolving Economy 73
12 Improving Banking Services in Comparatively Backward States 74
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The origins of the Reserve Bank of India can be traced to 1926, when the
Royal Commission on Indian Currency and Finance – also known as the
Hilton-Young Commission – recommended the creation of a central bank for
India to separate the control of currency and credit from the Government and
to augment banking facilities throughout the country. The Reserve Bank of
India Act of 1934 established the Reserve Bank and set in motion a series of
actions culminating in the start of operations in 1935. Since then, the Reserve
Bank’s role and functions have undergone numerous changes, as the nature of
the Indian economy and financial sector changed.
Overview
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Starting as a private shareholders’ bank, the Reserve Bank was nationalised
in 1949. It then assumed the responsibility to meet the aspirations of a newly
independent country and its people. The Reserve Bank’s nationalisation aimed
at achieving coordination between the policies of the government and those
of the central bank.
 1926: The Royal Commission on Indian Currency and Finance recommended
creation of a central bank for India.
 1927: A bill to give effect to the above recommendation was introduced in
the Legislative Assembly, but was later withdrawn due to lack of agreement
among various sections of people.
 1933: The White Paper on Indian Constitutional Reforms recommended the
creation of a Reserve Bank. A fresh bill was introduced in the Legislative
Assembly.
 1934: The Bill was passed and received the Governor General’s assent
 1935: The Reserve Bank commenced operations as India’s central bank on
April 1 as a private shareholders’ bank with a paid up capital of rupees five
crore (rupees fifty million).
 1942: The Reserve Bank ceased to be the currency issuing authority of Burma
(now Myanmar).
 1947: The Reserve Bank stopped acting as banker to the Government of
Burma.
 1948: The Reserve Bank stopped rendering central banking services to
Pakistan.
 1949: The Government of India nationalised the Reserve Bank under the
Reserve Bank (Transfer of Public Ownership) Act, 1948.
Origins of the Reserve Bank of India
The functions of the Reserve Bank today can be categorised as follows:
 Monetary policy
 Regulation and supervision of the banking and non-banking financial
institutions, including credit information companies
 Regulation of money, forex and government securities markets as also
certain financial derivatives
 Debt and cash management for Central and State Governments
 Management of foreign exchange reserves
 Foreign exchange management—current and capital account management
Functions of the Reserve Bank
Box 1Box 2
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The Preamble to the Reserve Bank of India Act, 1934 (the Act), under which it
was constituted, specifies its objective as “to regulate the issue of Bank notes
and the 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”.
The objectives outlined in the Preamble hold good even after 75 years.
As evident from the multifaceted functions that the Reserve Bank performs
today, its role and priorities have, in the span of 75 years, changed in tandem
with changing national priorities and global developments. Essentially,
the Reserve Bank has demonstrated dynamism and flexibility to meet the
requirements of an evolving economy.
A core function of the Reserve Bank in the last 75 years has been the
formulation and implementation of monetary policy with the objectives of
maintaining price stability and ensuring adequate flow of credit to productive
sectors of the economy. To these was added, in more recent times, the goal of
maintaining financial stability. The objective of maintaining financial stability
has spanned its role from external account management to oversight of
banks and non-banking financial institutions as also of money, government
securities and foreign exchange markets.
The Reserve Bank designs and implements the regulatory policy framework
for banking and non-banking financial institutions with the aim of providing
people access to the banking system, protecting depositors’ interest,
and maintaining the overall health of the financial system. Its function
of regulating the commercial banking sector, which emerged with the
enactment of the Banking Regulation Act, 1949, has over time, expanded
to cover other entities. Thus, amendments to the Banking Regulation Act,
1949 brought cooperative banks and regional rural banks under the Reserve
Bank’s jurisdiction, while amendments to the Reserve Bank of India Act
saw development finance institutions, non-banking financial companies
 Banker to banks
 Banker to the Central and State Governments
 Oversight of the payment and settlement systems
 Currency management
 Developmental role
 Research and statistics
Continuity with Change
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and primary dealers coming under its regulation, as these entities became
important players in the financial system and markets.
Similarly, the global economic uncertainties during and after the Second
World War warranted conservation of scarce foreign exchange reserves by
sovereign intervention and allocation. Initially, the Reserve Bank carried
out the regulation of foreign exchange transactions under the Defence of
India Rules, 1939 and later, under the Foreign Exchange Regulation Act of
1947. Over the years, as the economy matured, the role shifted from foreign
exchange regulation to foreign exchange management.
Post-independence, as the emerging nation tried to meet the aspirations of
a large and diversified populace, the Reserve Bank, with its experience and
expertise, was entrusted with a variety of developmental roles, particularly
in the field of credit delivery. With the onset of economic planning in
1950-51, the Reserve Bank undertook a variety of developmental functions
to encourage savings and capital formation and widen and deepen the
agricultural and industrial credit set-up. Institution building was a significant
aspect of its role in the sixties and the seventies. The strategy for nearly
four decades placed emphasis on the state-induced or state-supported
developmental efforts. Subsequently, the role of the financial sector and
financial markets was also given an explicit recognition in the development
strategy.
The aftermath of the 1991 balance of payments and foreign exchange
crisis saw a paradigm shift in India’s economic and financial policies. The
approach under the reform era included a thrust towards liberalisation,
privatisation, globalisation and concerted efforts at strengthening the
existing and emerging institutions and market participants. The Reserve Bank
adopted international best practices in areas, such as, prudential regulation,
banking technology, variety of monetary policy instruments, external sector
management and currency management to make the new policy framework
effective.
The rapid pace of growth achieved by the financial system in the deregulated
regime necessitated a deepening and widening of access to banking services.
The new millennium has seen the Reserve Bank play an active role in balancing
the relationship between banks and customers; focusing on financial inclusion;
setting up administrative machinery to handle customer grievances; pursuing
clean note policy and ensuring development and oversight of secure and
robust payment and settlement systems.
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The last one-and-a-half decades have also seen growing integration of the
national economy and financial system with the globalising world. While
rising global integration has its advantages in terms of expanding the scope
and scale of growth of the Indian economy, it also exposes India to global
shocks. Hence, maintaining financial stability became an important mandate
for the Reserve Bank. This, in turn, has brought forth the need for effective
coordination and consultation with other regulators within the country and
abroad.
The following chapters provide more details on the primary functions of the
Reserve Bank.
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Organisation
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Central
Board of Directors
Governor
Deputy Governors
Executive Directors
Principal Chief General Manager
Chief General Managers
General Managers
Deputy General Managers
Assistant General Managers
Managers
Assistant Managers
Support Staff
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The Central Board of Directors is at the top of the Reserve Bank’s
organisational structure. Appointed by the Government under the provisions
of the Reserve Bank of India Act, 1934, the Central Board has the primary
authority and responsibility for the oversight of the Reserve Bank. It delegates
specific functions to the Local Boards and various committees.
The Governor is the Reserve Bank’s chief executive. The Governor supervises
and directs the affairs and business of the RBI. The management team also
includes Deputy Governors and Executive Directors.
The Central Government nominates fourteen Directors on the Central Board,
including one Director each from the four Local Boards. The other ten
Directors represent different sectors of the economy, such as, agriculture,
industry, trade, and professions. All these appointments are made for a period
of four years. The Government also nominates one Government official as a
Director representing the Government, who is usually the Finance Secretary
to the Government of India and remains on the Board ‘during the pleasure of
the Central Government’. The Reserve Bank Governor and a maximum of four
Deputy Governors are also ex officio Directors on the Central Board.
The Reserve Bank also has four Local Boards, constituted by the Central
Government under the RBI Act, one each for the Western, Eastern, Northern
and Southern areas of the country, which are located in Mumbai, Kolkata, New
Delhi and Chennai. Each of these Boards has five members appointed by the
Central Government for a term of four years. These Boards represent territorial
and economic interests of their respective areas, and advise the Central Board
on matters, such as, issues relating to local cooperative and indigenous banks.
They also perform other functions that the Central Board may delegate to
them.
The Reserve Bank has a network of offices and branches through which
it discharges its responsibilities. The units operating in the four metros —
Mumbai, Kolkata, Delhi and Chennai — are known as offices, while the units
located at other cities and towns are called branches. Currently, the Reserve
Bank has its offices, including branches, at 27 locations in India. The offices
and larger branches are headed by a senior officer in the rank of Chief General
Manager, designated as Regional Director while smaller branches are headed
by a senior officer in the rank of General Manager.
Central Board of Directors
Local Boards
Offices and Branches