DEPARTMENT OF TECHNICAL EDUCATION

ANDHRA PRADESH
Name Staff Member : P. BADARI NARAYANA
Designation : Sr. Lecturer
Branch : DCCP
Institute : Govt. Polytechnic, NELLORE
Year/Semester : VI Semester
Subject : BANKING-II
Sub. Code : CCP-604(B)
Topic : Reserve Bank - Functions
Duration : 50 Mts.
Sub Topic : Definition of Central Bank
Teaching Aids : PPT Presentations
CCP604(B).37 1
 Objective

On completion of this period, you would be

able to:

 Define Central Bank

 Evolution of RBI

 Functions of RBI
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Introduction
 In every country there is a bank which acts as a

banker to the government, has monopoly of

note-issue and controls entire banking system.

 Such a bank is known as “ central bank” of that

country. The central bank in INDIA is “ RESERVE

BANK OF INDIA”.

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Definitions

A central Bank can generally be defined as

 The Apex banking and Monitory institution

 Whose main function is

 To control, regulate and stabilize

 The Banking and Monetary system of the Country

 In the overall National interest.

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 Evolution of RBI

 The RBI was established on April 1st, 1935 under the RBI
act of 1934.

 It was originally started as share holders bank with a

share capital of Rs.5 crores.

 On 1-1-1949 Govt. of India paid compensation to all

shareholders and

 It was Nationalised under the Reserve Bank act of 1948.

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 Evolution of RBI

 The Reserve Bank of INDIA (RBI) came into

existence by an Act of Parliament in 1948.

 Its affairs are regulated by a central board of

twenty members.

 RBI has four local boards at Mumbai, Kolkata,

Delhi and Chennai.

 The central office of RBI is located in Mumbai.

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FUNCTIONS OF RBI

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The following are the functions of RBI:

 Note issuing authority

 Banker / Agent

 Financial Adviser to Government

 Custodian of cash reserves of banks

 Custodian of Foreign Exchange reserves

 Lender of the last resort

 Controller of credit
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Primary Functions

 To regulate the monetary system of the country

 Promote economic stability and

 Assist in all round growth of the economy within the

frame work of the policies laid down by the

Government.

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Conclusion

 In the next lesson we will see the

functions of RBI one by one in detail.

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Summary

In this class, you have learnt

 Definition of a Central Bank

 Evolution of RBI

 Functions of RBI

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Quiz

The Central Bank of India is ……………

a) State Bank of India

b) Reserve Bank of India

c) S B H

d) None

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Try to answer

1. What is a Central Bank?

2. How and When RBI was established?

3. List out various functions of RBI.

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Frequently Asked Questions

 Define a Central Bank?

 List the functions of RBI.

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