Reserve Bank of India
| Headquarters | Mumbai |
| founding | April 1, 1935 |
| president | Shaktikanta That |
| country |
 India
|
| currency | |
| ISO 4217 | INR |
| Currency reserves | US $ 451.1 billion (November 2019) |
| printer | Security Printing & Minting Corporation of India Ltd. (SPMCIL) |
| Website | spmcil.com |
| Mint (s) | Security Printing & Minting Corporation of India Ltd. (SPMCIL) |
| Website | spmcil.com |
| Website | |
| List of central banks | |
The Reserve Bank of India (RBI; Hindi : भारतीय रिज़र्व बैंक , Bhāratīya Rizarv Baiṅk ) is the central bank of India and is responsible for the monetary policy for the Indian rupee . It was incorporated on April 1, 1935 as a public limited company under the Reserve Bank of India Act of 1934. After the nationalization in 1949, she performed numerous delegating functions in the Indian economy until the 1990s. In the 1990s, the role of the Mumbai-based Reserve Bank changed from a delegating state bank to a central bank, which is supposed to accompany the development process of the opening Indian economy. The discount rate is 6.0% and the repo rate is 4.75%. The reverse repo rate, the interest rate at which RBI can borrow money from banks, is 3.25%.
history
founding
In India, the development of the money market after the First World War made it necessary to set up a central bank to cope with economic difficulties and the collapse of currencies in a number of countries. Strong economic growth and the associated increasing demands on the financial sector were further challenges, so that in 1925 the Royal Commission on Indian Currency and Finance (also: Hilton Young Commission ) was established. This commission recommended the establishment of an independent institution that should be entrusted with all tasks that were necessary to ensure monetary stability in India. Based on this recommendation, the first draft for the design of an Indian central bank was created in 1927, which was changed several times in the following years and completed in 1934.
The Central Board of Directors , which met for the first time on January 14, 1935, was founded on the basis of the plans , but the RBI as an institution was not officially founded until April 1 of the same year. The Reserve Bank of India Act, 1934 (II of 1934) formed the legal basis for this establishment . After the bank's headquarters were initially in Calcutta , it was relocated to Mumbai (formerly: Bombay) in 1937.
1935-1950
In the first few years, RBI was a stock corporation , which was intended to ensure that it was largely independent of the government in office. Furthermore, bureaucratic restrictions for entrepreneurial dynamism in the private sector of India should be avoided. The bank began operations by taking on functions previously carried out by the government's monetary department and the Imperial Bank of India. On the one hand, this was the administration of the government accounts and, on the other hand, the management of the central government's payment transactions has been handled by the RBI since then, without influencing them with interest payments or claims.
In this early phase of the Reserve Bank, its role as the bank of the state was particularly important, which was connected with the events of World War II . This function in the English colonial administration meant that the RBI co-financed the war expenses of the Allies. The result was great money supply growth against foreign exchange . In 1938, the RBI issued its first banknotes . After India gained independence from British colonial rule in 1947, the bank was nationalized at the beginning of 1949.
1950-1960
After India's independence, a socialist planned economy was to be built up in the country . The first five-year plan from 1951 emphasized above all the central importance of rural regions for the national economy. The commercial banks were insufficiently funded to support agricultural development and were nationalized in many ways. Therefore, the All India Rural Credit Survey Committee recommended the formation of a state-backed bank. In July 1955, the Imperial Bank of India was transformed into a state bank, the State Bank of India.
On the basis of the Banking Companies Act, 1949 (later renamed the Banking Regulation Act ), an important pillar of the RBI was built up in the 1950s with the banking supervision for commercial banks. As a result, the RBI was entrusted with the supervision and strengthening of the banking system, which had been weak and opaque until then. During this time, however, the RBI also played an important role in the context of monetary policy , as it was responsible for providing the necessary financial resources for building up the economy.
1960-1969
The failure of several banks at the beginning of the 1960s made clear the need to introduce deposit insurance , which was introduced in India on December 7, 1961. This should increase investor confidence in the banking system and help improve the stability and growth of the banking sector. In 1962, by amending the RBI Act, RBI was given the power to collect information on the facilities guaranteed by banks .
The 1960s were also marked by the establishment of state-controlled institutions that were supposed to provide long-term funds for the economy. This was u. a. the Agriculture Refinance Corporation , which commercial banks refinancing options ready made and the Unit Trust of India , the opportunities for capital investments created for small investors. The founding of these institutions was accompanied by the establishment of the catchphrase Developing Banking and aimed at promoting the Indian economy. Indira Gandhi won the 1966 elections and, after a transition phase, initiated restructuring of the financial sector.
1969-1985
The Indian government nationalized 14 credit institutions in 1969 and six in 1980. The Gandhi administration and its successors heavily regulated this industry in the 1970s and 1980s. The central bank assumed numerous functions as a central actor in the banking landscape. The control of interest rates, minimum reserves and sight deposits has been realigned. The measures were aimed at improving economic development, which was carried out in accordance with the political guidelines of the government. This intervention policy intervened deeply in the business policy of the industry and directed credits into selected economic sectors such as agriculture and small businesses. In addition, banks were forced to set up two branches in rural regions for each new branch in a city in order to expand the branch network.
The oil crisis in 1973 had an impact on the work of the RBI due to the sharp rise in the price of oil. In order to regulate the related inflation , the RBI was forced to take some restrictive measures within the framework of monetary policy that were intended to restrict the circulation of money.
1985-1991
The years 1985 to 1991 were marked by the establishment of numerous commissions that carried out studies in a wide variety of areas of the economy and thus influenced the work of the RBI. These were, for example, the Board for Industrial and Financial Reconstruction , the Indira Gandhi Institute of Development Research or the Security & Exchange Board of India . While the former two were more concerned with studying the economy in general, the Security & Exchange Board of India was primarily concerned with developing a system to improve market security and investor protection. In real terms, the Indian financial sector in the years before the reform corresponded to the classic image of a "financial repression" (Mackinnon and Shaw).
Further institutions were set up, which resulted in an expansion of the tasks in the banking sector. Thus, in April 1988, the Discount and Finance House of India began its business in the money market and in July of the same year the National Housing Bank opened , which was active in the field of real estate finance. A law from 1988 also greatly expanded the check system in India. The law should encourage payment by check through penalties for the misuse of checks.
1991-2000
In July 1991 there was a sharp devaluation of the Indian rupee in the course of a macroeconomic crisis. It lost a total of 18% against the US dollar . The report of the Narsimahmam Committee then recommended far-reaching reforms in the Indian banking sector. These included a. a phased reduction in the reserve requirement ratio and the statutory liquidity ratio (the amount that a bank must hold in the form of cash, gold or verified collateral). In 1993 guidelines for the establishment of a private banking sector were issued. This heralded a new policy, often referred to as neo-liberal , with the aim of increasing competition. So were z. For example, bank interest rates have been deregulated and various segments of the credit markets, including the credit card market and the bond markets for real estate, are less restrictive. The success of the first phase led in 1998 to further liberalization and diversification and privatization efforts of the ownership structures.
In June 1994 the National Stock Exchange of India started its work. In the following month, the nationalized banks were allowed to strengthen their capital base by accessing the capital market. In February 1995, Bharatiya Reserve Bank Note Mudran Limited was founded as a subsidiary of RBI, which started printing banknotes in June.
From 2000
In June 2000, the Foreign Exchange Management Act of 1999 came into force. Its aim is to facilitate foreign trade and foreign payments, as well as to promote the introduction and maintenance of the foreign exchange market. Over the past few years, RBI has made continuous efforts to further develop the financial markets and strengthen the financial sector, primarily through the use of technological innovations. Internet banking was introduced in India in 2001 and a modern payment system was put into operation in 2004 and 2005. In January 2006 the Security Printing & Minting Corporation of India Ltd. Founded by the merger of nine different mints and printing houses. The state-owned company has since been responsible for printing banknotes and minting coins, among other things.
Since the Indian economy slipped to economic growth of 5.8% in the fourth quarter of 2008–2009 in the wake of the financial crisis from 2007 onwards , the Indian central bank has been promoting economic development.
Structure of the RBI
Central Board of Directors
The affairs of the RBI are regulated in the Central Board of Directors (CBD). This forms the highest decision-making body of the RBI and consists of a maximum of 20 members who are appointed by the government of India for a period of four years. It consists of the official directors, i.e. a governor and up to four lieutenant governors, and the central government also nominates a director from each of the four regional offices of the bank for the board of directors. In addition, ten directors from different fields of society are directly appointed and the government sends a government official. The government's nomination of members shows the RBI's dependence on the Indian government.
There are currently only three vice-governors represented on the board, which means that the CBI currently consists of the following 19 members:
| Surname | function |
|---|---|
| D. Subbarao | governor |
| Shyamala Gopinath | Lieutenant governor |
| Usha Thorat | Lieutenant governor |
| KC Chakrabarty | Deputy Governor |
| YH Malegam | Regional representative (west) |
| Suresh D. Tendulkar | Regional representative (east) |
| UR Rao | Regional representative (north) |
| Lakshmi Chand | Regional representative (south) |
| HP Ranina | Attorney Supreme Court of India |
| Ashok Sekhar Ganguly | Chairman of Firstsource Solutions Limited |
| Azim Premji | Chairman of WIPRO Limited |
| Kumar Mangalem Birla | Chairman of the Aditya Birla Group of Companies |
| Shashi Rajagopalan | Consultant especially in accounting |
| Suresh Neotia | former Chairman Ambuja Cement Co. |
| A. Vaidyanathan | Economist, Madras Institute |
| Man Mohan Sharma | Chemist, Mumbai University |
| D. Jayavarthanavelu | Chairman of Lakshmi Machine Works Limited |
| Sanjay Labroo | Managing Director Asahi India Glass Ltd. |
| Ashok Chawla | Government officials |
Governors of the RBI
| Term of office | Surname |
|---|---|
| April 1, 1935– June 30, 1937 | Osborne Smith |
| July 1, 1937– February 17, 1943 | James Braid Taylor |
| August 11, 1943 to June 30, 1949 | Chintaman Dwarkanath Deshmukh |
| July 1, 1949– January 14, 1957 | Benegal Rama Rough |
| January 14, 1957– February 28, 1957 | KG Ambegaonkar |
| 03/01/1957– 02/28/1962 | Iyengar HVR |
| March 1, 1962 to June 30, 1967 | Paresh Chandra Bhattacharya |
| July 1, 1967– May 3, 1970 | Lakshmi Kant Jha |
| May 4, 1970– June 15, 1970 | Bhaskar Namdeo Adarkar |
| June 16, 1970– May 19, 1975 | S. Jagannathan |
| May 19, 1975– Aug 19, 1975 | NC Sen Gupta |
| 08/20/1975–02/05/1977 | KR Puri |
| May 2, 1977 to November 30, 1977 | M. Narasimham |
| December 1, 1977– September 15, 1982 | Indraprasad Gordhanbhai Patel |
| September 16, 1982– January 14, 1985 | Manmohan Singh |
| January 15, 1985– February 4, 1985 | Amitav Ghosh |
| February 4, 1985 to December 22, 1990 | RN Malhotra |
| December 22, 1990-21 December 1992 | S. Venkitaramanan |
| 12/22/1992–11/11/1997 | C. Rangarajan |
| November 22, 1997–06 September 2003 | Bimal Jalan |
| Sep 6, 2003– Sep 5, 2008 | Y. Venugopal Reddy |
| 05.09.2008-04.09.2013 | D. Subbarao |
| 04.09.2013–19.09.2016 | Raghuram Rajan |
| 19.09.2016–10.12.2018 | Urjit Patel |
| since 12.12.2018 | Shaktikanta That |
In the history of the RBI there have been 25 governors so far. On December 12, 2018, Shaktikanta Das took office after his predecessor Urjit Patel, who had been in office since 2016, surprisingly submitted his immediate resignation on December 10, 2018.
Regional representatives
In addition to the Executive Board, RBI has four regional agencies in the North, South, West and East regions. The agencies are based in New Delhi , Chennai , Mumbai and Calcutta . Each regional agency consists of five members who - like the CBD - are appointed by the government for four years.
The regional representatives have the following tasks:
- Advising the Central Board on Directors on regional matters
- Representing the interests of local banks
- Performing other tasks that are delegated by the board
Board of Financial Supervision
In November 1994 the Board of Financial Supervision (BFS) was set up as the Central Board's committee on directors . It is made up of four of its members, who are appointed for a period of two years. Here, too, the chairman is the governor and the vice-governors are ex officio members of the FSO.
The primary aim of the FSO is to oversee the financial sector, which is made up of commercial banks, financial institutions and non-bank financial service providers.
Some of the tasks that the FSO is pursuing in this context are:
- the restructuring of the system of bank inspections
- Introduction of external monitoring
- Strengthening the role of statutory auditors
- Strengthening the internal protection of monitored institutions
tasks
The preamble describes its function as a central bank as follows:
"... 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."
The RBI policy is based on the following three objectives:
- Price level stability
- adequate economic growth (by ensuring the availability of credit)
- Ensuring financial stability
This results in the following tasks:
Monetary policy
The formulation, control and monitoring of monetary policy is one of the tasks of the RBI. As a central bank, it pursues two fundamental objectives in terms of monetary policy. On the one hand, price level stability is to be guaranteed and, on the other hand, the flow of credit into productive economic sectors is to be ensured. The Indian economy is heavily dependent on the public sector, so since the reforms in the financial sector in the 1990s, the central bank has pursued an expansive monetary policy designed to support the private sector.
The RBI decides on the size and value of the banknotes that are printed annually. The amount of banknotes to be printed depends on the demand for banknotes. The RBI estimates this demand on the basis of data on inflation, the growth of the gross domestic product, the replacement of destroyed banknotes and the required reserve stocks of the central bank. Statistical models are used for this. In consultation with the Indian government, the RBI also decides on the design of the banknotes, including their security features.
The banknotes are issued by the 18 RBI issuing houses, which are supplied directly by the printing companies. The RBI is also responsible for the destruction of unusable banknotes. The amount of coins to be minted is determined by the Indian government, which is advised by the RBI.
Financial market supervision
One of the goals of RBI is to maintain public confidence in the financial market within the framework of financial market supervision. The aim is to protect the interests of investors and to offer the public inexpensive banking services. In order to be able to implement these goals, the RBI defines framework conditions for activities in the financial market in which banks and other financial institutions have to operate. The RBI has a complaints office ( Office of Banking Ombudsman ), which processes customer complaints about the banking service. The supervision of private and state banks takes place in a de jure tradition independent of the state.
Management of currency reserves
The tasks in the administration of the currency reserves are based on the Foreign Exchange Management Act of 1999. In order to enable external trade and payments, the control of the foreign exchange market in India is a task of the RBI. In 2006, when the world's highest currency reserves existed, India had US $ 171 billion of these funds.
Development role
In addition to the "usual" tasks of a central bank, the RBI also plays an important role in supporting the government. The RBI and the government work closely together in India and have been closely linked since the nationalization of the RBI, which is also evident from the government's appointment of the members of the RBI. The RBI performs functions that are intended to support national political goals, including the management of loans in certain economic sectors. The central bank is faced with strong inter-sectoral and local persistence , which results to a large extent from the strong role of the public sector.
State Bank
The RBI acts as a bank of the state on the basis of the Reserve Bank of India Act of 1934 and is therefore obliged to regulate and carry out the banking operations of the Indian state government and the governments of the individual states. In its function as the bank's bank , RBI maintains bank accounts for all regular banks. In 1988, the National Housing Bank (NHB) was founded as a subsidiary to support private housing finance . In contrast to the Fed or the Bank of Japan , the Reserve Bank of India accounts for price-related performance according to the lower of book or market value principle in the conservative tradition of central bank accounting and subdivides it to this day, on the recommendation of the Hilton Young Commission of 1926 for the Central Bank Act, their balance sheet in the areas of Issue Department , which is responsible for the real money supply, and the Banking Department for all other central bank tasks .
literature
- Narenda Jadhav, Partha Ray, Dhritidyuti Bose, Indranil Sen Gupta: The Reserve Bank Of India's Balance Sheet: Analytics and Dynamics of Evolution , November 2004
- Cecil Kisch: Review "The Monetary Policy of the Reserve Bank of India" by KN Raj . In: The Economic Journal . Vol. 59, No. 235 (Sep. 1949), pp. 436-438
- Panicos O. Demetriades, Kul B. Luintel: Financial Development, Economic Growth and Banking Sector Controls: Evidence from India . In: The Economic Journal . Vol. 106, No. 435 (Mar., 1996), pp. 359-374
- Findlay G. Shirras: The Reserve Bank of India; The Economic Journal, Vol. 44, No. 174 (Jun. 1934), pp. 258-274
See also
Web links
Individual evidence
- ^ India Foreign Exchange Reserves . tradingeconmoics.com. Accessed January 30, 2017 (English)
- ^ Second Quarter Review of Monetary Policy 2009-2010 - Announced on the 27th October 2009 , accessed November 27, 2009
- ↑ Kisch, 1949, p. 436.
- ↑ Shirras, 1934, p. 258.
- ↑ Bernhard Wolf: On the importance of the financial infrastructure in developing countries . Duncker & Humblot, Berlin 1984, p. 123, ISBN 3-428-05578-0 .
- ↑ a b c Narenda Jadhav, Partha Ray, Dhritidyuti Bose, Indranil Sen Gupta: The Reserve Bank Of India's Balance Sheet: Analytics and Dynamics of Evolution , November 2004, p. 16.
- ↑ Beth Anne Wilson and Geoffrey N. Keim: India and the Global Economy in Business Economics, January 2006, p. 29.
- ^ Reserve Bank of India - Publications. In: rbi.org.in. February 4, 2005, accessed March 24, 2019 .
- ↑ Chronology of Events, Institution Building- 1960 to 1971 (RBI)
- ^ A b Ananya Mukherjee Reed: Corporate Governance Reforms in India in Journal of Business Ethics, Volume 37, Number 3 / May, 2002, p. 253.
- ↑ Sunil Kumar, Rachita Gulati: Did efficiency of Indian public sector banks converge with banking reforms? in Int Rev Econ (2009) 56: 47-84, pp. 47-48.
- ↑ Demetriades; Luintel, 1996, p. 360.
- ↑ Alpana Killawala: “History of The Reserve Bank of India - Summary”, Reserve Bank of India Press Release, March 18, 2006 (RBI), (.pdf; 120 kB)
- ^ Balance Sheet (2004), p. 40.
- ↑ Sunil Kumar, Rachita Gulati: Did efficiency of Indian public sector banks converge with banking reforms? in Int Rev Econ (2009) 56: 47-84, p. 48.
- ↑ Chronology of Events, Developing the Markets: Seeds of Liberalization- 1985 to 1991 (RBI)
- ↑ Amal Kanti Ray: India's Social Development in a Decade of Reforms: 1990–91 / 1999–2000 in Social Indicators Research, Volume 87, Number 3 / July, 2008, p. 410.
- ^ Ananya Mukherjee Reed: Corporate Governance Reforms in India in Journal of Business Ethics, Volume 37, Number 3 / May, 2002, p. 257.
- ↑ Raghbendra Jha, S. Ibotombi Longjam: Structure of financial savings during Indian economic reforms in Empirical Economics (2006) 31: 861-869, S. 862nd
- ↑ Sunil Kumar, Rachita Gulati: Did efficiency of Indian public sector banks converge with banking reforms? in Int Rev Econ (2009) 56: 47-84, p. 49.
- ↑ Chronology of Events, Crisis and Reforms 1991 to 2000 (RBI)
- ^ RBI History - Spanning 7 Decades of Public Service
- ^ Security Printing & Minting Corporation of India, About Us ( Memento of February 6, 2010 in the Internet Archive ) (SPMCIL)
- ↑ Second Quarter Review of Monetary Policy for the Year 2009-10 ( Memento of March 26, 2010 in the Internet Archive ), Item 15., (RBI)
- ↑ Macroeconomic and Monetary Developments - Second Quarter Review 2009-10 , p. 94, (RBI), (.pdf; 6.5 MB)
- ↑ a b c d RBI, About Us, Organization and Functions (RBI)
- ↑ Sir Benegal Rama Rau , in: Internationales Biographisches Archiv 14/1970 of March 23, 1970, in the Munzinger Archive ( beginning of the article freely available)
- ^ A b Marco Kauffmann Bossart: India's central bank chief throws in the towel. In: www.nzz.ch. December 10, 2018, accessed December 10, 2018 .
- ↑ Jayanta Roy Chowdhury: DeMo-era Shaktikanta Das is the new RBI chief. In: www.telegraphindia.com. December 12, 2018, accessed December 15, 2018 .
- ^ Reserve Bank of India Act, 1934.
- ↑ Communication Policy of The Reserve Bank of India (RBI), (.pdf; 31 kB)
- ^ Dipak Basu: Balance-of-Payments Policies and Structural Reforms: an Adaptive-Control Model for India in Journal of Economics, Volume 70 (1999), No. 3, pp. 261-280, p. 275.
- ↑ a b RBI, Frequently Asked Questions, Currency Matters ( Memento from January 12, 2012 in the Internet Archive ) (RBI)
- ↑ Sumit K. Majumdar, Kunal Sen: The debt wish: Rent seeking by business groups and the structure of corporate borrowing in India in Public Choice, Volume 130, Numbers 1–2 / January, 2007, p. 212.
- ↑ bpb.de (.pdf; 138 kB) according to United Nations Conference on Trade and Development (UNCTAD): Handbook of Statistics 2008 .
- ↑ Samarjit Das, Kaushik Bhattacharya: Price convergence across regions in India in Empirical Economics (2008) 34: 299-313, p. 312.
- ↑ Alpana Sivam, Sadasivam Karuppannan: Role of state and market in housing delivery for low-income groups in India in Journal of Housing and the Built Environment 17: 69-88, 2002, p. 85.
- ^ Balance Sheet (2004), p. 8.
- ^ Balance Sheet (2004), pp. 19-20.
- ^ Balance Sheet (2004), p. 12.
