01 Banking Industry And RBI As A Regulator
01 Reserve Bank of India as a Banking Regulator
RESERVE BANK OF India was set up in 1935 under the Reserve Bank of India Act. 1934 and is the monetary authority and central bank of the country with responsibilities to overview, develop and regulate the financial system.
CENTRAL BANKING FUNCTIONS
1. Reserve Bank. as Note-Issuing Authority Section 38 of the RBI Act
The currency of our country consists of one-rupee notes and coins (including subsidiary coins) issued by the Government of India and bank notes issued by RBI. As required by -
Government puts into circulation one-rupee coins and notes through RBI only. RBI has the sole right to issue bank notes in India. The notes issued by RBI and the one-rupee notes and coins issued by the Government are unlimited legal tender. RBI also bears the responsibility of exchanging notes and coins into those of other denominations as required by the public.
2. Reserve Bank as Banker to Government Section 20 and 21 of RBI Act,
RBI acts as banker to the Central and State Governments to transact government business including the management of the public debt of the Central Government. Section 21 requires the Central Government to entrust RBI all its money, remittance, exchange and banking transactions in India and, in particular deposit free of interest all its cash balances with RBI. RBI performs similar functions on behalf of the State Governments also. The Bank has entered into agreements with the Central and State Governments for carrying on these functions. For conducting ordinary banking business of the Central Government, RBI is not entitled to any remuneration; it holds cash balances of the Government free of interest. For the management of public debt, RBI is entitled to charge a commission. RBI is also required to maintain currency chests of its Issue Department at places prescribed by the Government and to maintain sufficient notes and coins therein.
Reserve Bank of India has also been entrusted with the
RESERVE BANK OF India was set up in 1935 under the Reserve Bank of India Act. 1934 and is the monetary authority and central bank of the country with responsibilities to overview, develop and regulate the financial system.
CENTRAL BANKING FUNCTIONS
1. Reserve Bank. as Note-Issuing Authority Section 38 of the RBI Act
The currency of our country consists of one-rupee notes and coins (including subsidiary coins) issued by the Government of India and bank notes issued by RBI. As required by -
Government puts into circulation one-rupee coins and notes through RBI only. RBI has the sole right to issue bank notes in India. The notes issued by RBI and the one-rupee notes and coins issued by the Government are unlimited legal tender. RBI also bears the responsibility of exchanging notes and coins into those of other denominations as required by the public.
2. Reserve Bank as Banker to Government Section 20 and 21 of RBI Act,
RBI acts as banker to the Central and State Governments to transact government business including the management of the public debt of the Central Government. Section 21 requires the Central Government to entrust RBI all its money, remittance, exchange and banking transactions in India and, in particular deposit free of interest all its cash balances with RBI. RBI performs similar functions on behalf of the State Governments also. The Bank has entered into agreements with the Central and State Governments for carrying on these functions. For conducting ordinary banking business of the Central Government, RBI is not entitled to any remuneration; it holds cash balances of the Government free of interest. For the management of public debt, RBI is entitled to charge a commission. RBI is also required to maintain currency chests of its Issue Department at places prescribed by the Government and to maintain sufficient notes and coins therein.
Reserve Bank of India has also been entrusted with the