functions of reserve bank of india
CS 1
Functions of Reserve Bank of India
1. Information. Fights against economic crisis and ensures economic and price stability in the country
2. Promotional Functions
3. Promotional of banking habit and expansion of banking systems. Provides refinance for export promotion. Expansion of facilities for the provision of agricultural credit through NABARD
4. Extension of facilities for the Small Scale Industries.
5. Helping the co-operative sector.
6. Prescription of minimum statutory requirements. Innovations in banking business.
A. Traditional Functions
The RBI functions on the traditional lines regarding the following activities.
1. Monopoly of Note Issue
In terms of Section 22 of the Reserve Bank of India Act, the RBI has been given the statutory function of note issue on a monopoly basis. The note issue in India was originally based upon "Proportional Reserve System".
When it became difficult to maintain the re serve proportionately, it was replaced by "Minimum Reserve System ". According to the RBI Amendment Act of 1957, the bank should now maintain a minimum reserve of Rs.200 crore worth of gold coins, gold bullion and foreign securities of which the value of gold coin and bullion should be not less than Rs.115 crore.
RBI manages circulation of money through currency chests. Originally RBI issued currency notes of Rs.2 and above. However, due to higher cost of printing small denomina tion notes these denominations are now coincides and issued by Government.
Currency Chests Currency Chests are receptacles in which stocks of issuable and new notes are stored along with rupee coins. Currency Chests are repositories run by RBI, SBI, subsidiaries of SBI, public sector banks, Government Treasuries and Sub treasuries.
Cur rency Chests help in expansion and contraction of currency in the country. The advantages for a bank having currency chest are:
(i) The bank can draw funds whenever it is required for its use and deposit funds when found surplus.
Functions of Reserve Bank of India
1. Information. Fights against economic crisis and ensures economic and price stability in the country
2. Promotional Functions
3. Promotional of banking habit and expansion of banking systems. Provides refinance for export promotion. Expansion of facilities for the provision of agricultural credit through NABARD
4. Extension of facilities for the Small Scale Industries.
5. Helping the co-operative sector.
6. Prescription of minimum statutory requirements. Innovations in banking business.
A. Traditional Functions
The RBI functions on the traditional lines regarding the following activities.
1. Monopoly of Note Issue
In terms of Section 22 of the Reserve Bank of India Act, the RBI has been given the statutory function of note issue on a monopoly basis. The note issue in India was originally based upon "Proportional Reserve System".
When it became difficult to maintain the re serve proportionately, it was replaced by "Minimum Reserve System ". According to the RBI Amendment Act of 1957, the bank should now maintain a minimum reserve of Rs.200 crore worth of gold coins, gold bullion and foreign securities of which the value of gold coin and bullion should be not less than Rs.115 crore.
RBI manages circulation of money through currency chests. Originally RBI issued currency notes of Rs.2 and above. However, due to higher cost of printing small denomina tion notes these denominations are now coincides and issued by Government.
Currency Chests Currency Chests are receptacles in which stocks of issuable and new notes are stored along with rupee coins. Currency Chests are repositories run by RBI, SBI, subsidiaries of SBI, public sector banks, Government Treasuries and Sub treasuries.
Cur rency Chests help in expansion and contraction of currency in the country. The advantages for a bank having currency chest are:
(i) The bank can draw funds whenever it is required for its use and deposit funds when found surplus.