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INDIAN BANK CONCEPT IT'S FUNCTION AND IMPORTANCE IN FINANCIAL SYSTEM

Written By Winston Bensford on Thursday, December 12, 2013 | 11:05 PM

BANKING CONCEPTS 



The Reserve Bank of India was established on April 1, 1935 in accordance with the provisions of the Reserve Bank of India Act, 1934.
BANK INDUSTRIES
The Central Office of the Reserve Bank was initially established in Calcutta but was permanently moved to Mumbai in 1937. The Central Office is where the Governor sits and where policies are formulated. Though originally privately owned, since nationalisation in 1949, the Reserve Bank is fully owned by the Government of India.


INDIAN BANKING STRUCTURE

TREE OF BANKING INDUSTRIES

MAIN FUNCTIONS

Monetary Authority Formulates, implements and monitors the monetary policy.
Objective: maintaining price stability and ensuring adequate flow of credit to productive sectors.

REGULATOR AND SUPERVISOR OF THE FINANCIAL SYSTEM

Prescribes broad parameters of banking operations within which the country‘s banking and financial system functions.
Objective: maintain public confidence in the system, protect depositors‘ interest and provide cost- effective banking services to the public.

MANAGER OF FOREIGN EXCHANGE

Manages the foreign exchange in accordance with the provision of Foreign Exchange Management Act, 1999.

Objective:  to  facilitate  external  trade  and  payment  and  promote  orderly  development  and maintenance of foreign exchange market in India.

ISSUER OF CURRENCY   

Issues and exchanges or destroys currency and coins not fit for circulation.
Objective: to give the public adequate quantity of supplies of currency notes and coins and in good quality.

Developmental role       

Performs a wide range of promotional functions to support national objectives.

Related Functions

Banker to the Government: performs merchant banking function for the central and the state governments; also acts as their banker.
Banker to banks: maintains banking accounts of all scheduled banks.

Monetary policy              

Monetary policy refers to the use of instruments under the control of the central bank to regulate the availability, cost and use of money and credit. 
The goal: achieving specific economic objectives, such as low and stable inflation and promoting
growth.The main objectives of Monetary Policy in India are: 

Maintaining price stability

Ensuring adequate flow of credit to the productive sectors of the economy to support economic growth

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BANKING HISTORY AND IT'S FUNCTION IN INDIAN ECONOMY

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