Reserve Bank of India

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Banks In India Latest News And Updates

Deadline to exchange pre-2005 currency notes extended
June 29, 2015 10:06 AM
The Reserve Bank of India has extended the deadline for exchanging pre-2005 currency notes of various denominations, including Rs.500 and Rs.1,000, by six months till December-end. "The Reserve Bank of India has extended the date for the public to exchange their pre-2005 banknotes till December 31, 2015," the central bank said in a press release. RBI had, in December 2014, set the last date to exchange these notes as June-end, asking the public to deposit the old design notes in their bank accounts or exchange them at a convenient bank branch. It had extended its earlier exchange deadline of January 1 till the end of this month. Source: IANS
State-run banks will need more capital to meet adequacy norms: RBI
June 27, 2015 11:09 AM
The Reserve Bank of India said on Friday that state-run banks are adequately capitalised, but would need additional funds to comply with international capital adequacy norms in the future. "Right now the banks are adequately capitalised. That is right. What we are telling banks and government is that going forward, keeping in view the future growth that is likely to come in economy and also based on Basel III norms, additional capital will be needed," RBI Deputy Governor R.Gandhi said while inaugurating a conference in New Delhi on "Financial Frauds - Risks and Preventions", organised by the Associated Chambers of Commerce and Industry of India. "It is a continuous exercise, it is not that immediately right now today it is required, but going forward it is definitely warranted," he said. Source: IANS
RBI coaxes banks for policy on tackling fraud
June 27, 2015 10:50 AM
Citing commercial banks' failure to know about the people in the transactions chain as the root cause of financial frauds, the Reserve Bank of India on Friday said it is making efforts to convince banks to have a policy on tackling fraud. "Though a whistleblower policy in banks from the vigilance perspective is already there, the RBI is trying to advise the banks that they have such a policy to prevent fraud as well," Deputy Governor R. Gandhi said while inaugurating a conference on "Financial Frauds - Risks and Preventions", organised here by the Associated Chambers of Commerce and Industry. Source: IANS
India's largest NBFC gets RBI nod to set up universal bank
June 18, 2015 10:22 AM
India's largest microfinance company Bandhan Financial Services Ltd. (BFSL) on Wednesday received the final nod from the Reserve Bank of India (RBI) to set up a universal bank. BFSL, presently a non-banking financial company (NBFC), is scheduled to kick-start its banking operations on August 23 this year in Kolkata. "Our plan is to open around 500-600 branches across India with a special focus on the east and north-eastern parts of the country. We will be a bank for all, but our primary objective will be to serve the unbanked," the company's director Chandra Shekhar Ghosh said. Source: IANS
Jaitley asks banks to pass RBI rate cuts to borrowers
June 13, 2015 10:25 AM
Finance Minister Arun Jaitley on Friday expressed the hope that those commercial banks which have not passed on to borrowers the interest rate cuts made by the Reserve Bank of India (RBI) this year, would do so over the next few weeks. "There was a presentation made by each bank on the RBI rate cuts of 25 basis points each from December to June. Some banks have not passed on the rate cuts. I hope over the next few weeks they will be in a position to reduce rates," he told reporters here after meeting with heads of public and private sector banks. "The banks expressed problems in their balance sheets. They also asked us to take a relook at the small saving schemes, which with their high rates at 8.5 to 9 percent is pushing up their deposit rates," the finance minister said. Source: IANS

India's central banking authority is Reserve Bank of India (RBI), which was founded on 1 April 1935. The official owner of the Reserve Bank of India is the Government of India. The Reserve Bank of India Act 1934 was enacted to establish this organisation. The monetary
policy of the Indian Rupee is subject to the authority of the RBI. The headquarter of the RBI is where the Governor's seat is. Various policies are also formulated at the Central Office (headquarter). The RBI's Central Office is in Mumbai, Maharashtra. The RBI headquarter was established in Kolkata (West Bengal) in 1935, but was shifted to Mumbai permanently two years later. The present Governor of the Reserve Bank of India is Dr. Raghuram Rajan (2013- present).

Early History

There was a need to find a solution to the economic crisis caused by the consequences of the World War I. India's first Minister of Law & Justice and the Chief Architect of the Constitution of India Dr. Bhimrao Ambedkar put forth the outlook and guidelines for the conceptualisation of RBI in his book “The Problem of the Rupee- its origin and its solution”. The recommendations of the Royal Commission on Indian Currency and Finance 1926 became the basis of the establishment of the RBI. The RBI was finally set up in 1935 and came under the Government of India control in 1949 after the Bank's nationalisation.

Functions & Organisation of RBI

The RBI has a 'Preamble', through which the basic function of the RBI is described 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”.

Central Board

The Central Board of Directors is the sole governing body of the Reserve Bank of India. The Central Board of Directors comprises the Governor, four Deputy Governors, four regional boards directors, two directors representing the Ministry of Finance and 10 others. All the directors of the Central Board are appointed by the Government of India for a period of four years. The present Central Board comprises:-

NameDesignation
Raghuram RajanGovernor
H.R. KhanDeputy Governor
Dr. Urjit R. PatelDeputy Governor
R. GandhiDeputy Governor
S.S. MundraDeputy Governor

Executive Directors

  • D.K. Mohanty
  • P. Vijaya Bhaskar
  • G. Padmanabhan
  • Jasbir Singh
  • Dr. Deepali Pant Joshi
  • N.S. Vishwanathan
  • U.S. Paliwal
  • Chandan Sinha
  • Dr. M.D. Patra
  • K.K. Vohra
  • G. Mahalingam

Prime Functions of the Reserve Bank of India

  • Monetary Authority- The RBI has the monetary authority that enables it to use the instruments to regulate cost and availability, uses money and credit under the RBI control. Maintenance of pricing stability, promotion of the economic growth of the country and low & stable inflation are ensured through the monetary authority of the RBI.
  • Issues Currency- The unique authority to issue currency notes in India solely lies with the Reserve Bank of India. The RBI is an agent to Government of India (GoI) for handling and distributing coins in India as GoI mints the coins. The security features of the currency are upgraded by the RBI on a regular basis to negate counterfeiting of currency. RBI has the authority to issue up to 10,000 rupee notes. The RBI has four printing facilities in Nasik, Dewas, Salboni and Mysore.
  • The Bank for Banks- RBI is the Banker to all the banks. Accounts of all the banks in India are maintained with the RBI. The interbank and customer transactions are smoothly carried out with help of RBI, which also plays the part of being the last resort for all the banks.
  • Debt Manager and Banker to Government- The Government carries out its financial transactions through, just like the common man does through normal banks. The accounts of the GoI are maintained with the RBI. The Government of India is also helped by the RBI to collect public money through government approved securities and issuing bonds.
  • Regulates the Banking System- The financial system of the country is regulated by the RBI. The public faith and confidence and the financial stability in the nation's banking system is ensured by the RBI as a supervisor and regulator of the Indian banking system. Issuing of the new bank licenses, regulating interest rates and placing capital requirements are prerogatives of the RBI.
  • Manages Foreign Exchange- The RBI also manages and regulates the Foreign Exchange, as well as the gold reserves of the country. By undertaking the sale and purchase of the foreign currency, the Financial Market Department (FMD) of the RBI takes part in the Foreing Exchange Market to ease the unpredictability when there is excess of supply or demand of the foreign currency.

Legal Fabric

There has to be a legal framework for any organisation to function smoothly and according to the law of the land. An organisation of such prodigy as the Reserve Bank of India, needs special legal fabric to operate with precision for public as well as national welfare. Over the 80 years of the RBI's functioning, there have been a number of Acts laid down for the institution to work under a set paradigm.

Acts administered by the RBI-

  • Reserve Bank of India Act, 1934
  • Public Debt Act, 1944
  • Banking Regulation Act, 1949
  • Foreign Exchange Management Act, 1999
  • Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (Chapter II)
  • Credit Information Companies (Regulation) Act, 2005
  • Payments and Settlements Systems Act, 2007
  • Payment and Settlements Systems Regulations, 2008 and Amended up to 2011 and BPSS Regulations, 2008
  • Factoring Regulation Act, 2011

Some of the other reference acts-

  • Negotiable Instruments Act, 1881
  • State Bank of India Act, 1955
  • Companies Act, 1956
  • Deposit Insurance and Credit Guarantee Corporation Act, 1961
  • Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970
  • Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980
  • Recovery of Debts Due to Banks and Financial Institutions Act, 1993
  • Indian Coinage Act, 2011

Governors of Reserve Bank of India

The Reserve bank of India was established in 1935 as per the provisions of the Reserve Bank of India Act, 1934 and was owned by private share holders initially. It was only after India's independence in 1947 that it came under the control of the Government of India, which started appointing the Governors of the RBI from 1947 onwards. There have been 23 gentlemen who have served as the Governor of this organisation over a period of 80 years. They are:-
S.No.Name and Tenure
1Sir Osborne A. Smith (1 April 1935 – 30 June 1937)
2Sir James Braid Taylor (1 July 1937 – 17 February 1943)
3Sir Chintaman D.Deshmukh (11 August 1943 – 30 June 1949)
4Sir Benegal Rama Rau (1 July 1949 – 14 January 1957)
5K.G. Ambegaonkar (14 January 1957 – 28 February 1957)
6H.V.R. Iengar ( 1 March 1957 – 28 February 1962)
7P.C. Bhattacharyya (1 March 1962 – 30 June 1967)
8L.K. Jha (1 July 1967 – 3 May 1970)
9B.N. Adarkar (4 May 1970 – 15 June 1970)
10S. Jagannathan (16 June 1970 – 19 May 1975)
11N.C. Sen Gupta (19 May 1975 – 19 August 1975)
12K.R. Puri (20 August 1975 – 2 May 1977)
13M. Narasimham (2 May 1977 – 30 November 1977)
14Dr. I.G.Patel (1 December 1977 – 15 September 1982)
15Dr. Manmohan Singh (16 September 1982 – 14 January 1985)
16A. Ghosh (15 January 1985 – 4 February 1985)
17R.N. Malhotra (4 February 1985 – 22 December 1990)
18S.Venkitaramanan (22 December 1990 – 21 December 1992)
19Dr. C.Rangarajan (22 December 1992 – 22 November 1997)
20Dr. Bimal Jalan (22 November 1997 – 5 September 2003)
21Dr.Y.V.Reddy (6 September 2003 – 5 September 2008)
22Dr. D. Subbarao (5 September 2008 – 4 September 2013 (Close of Business))
23Dr. Raghuram Rajan (4 September 2013 (Close of Business) – Present)*

Offices of the Reserve Bank of India

The RBI has 22 regional offices in the state capitals throughout the country. The other institutions that are undertaken by the RBI are:-
  • College of Agricultural Banking
  • Banker's Training College
  • Reserve Bank of India Staff College
  • National Institute of Bank Management
  • Indira Gandhi Institute of Development Research (IGIDR)
  • Institute for Development & Research in Banking Technology (IDRBT)

Head Office Address of RBI

Reserve Bank of India,
Central Office,
Shaheed Bhagat Singh Road,
Mumbai - 400001
Website: www.rbi.org.in

Last Updated on May 15, 2015