Definition[edit]The definition of a bank varies from country to
country. See the relevant country page (below) for more
information.UnderEnglish common law, a banker is defined as a
person who carries on the business of banking, which is specified
as:[12] conductingcurrent accountsfor his customers,
payingchequesdrawn on him/her, and collectingchequesfor his/her
customers.
Banco de VenezuelainCoro.
Branch ofNepal Bankin Pokhara, Eastern Nepal.In most common law
jurisdictions there is a Bills of Exchange Act that codifies the
law in relation tonegotiable instruments, includingcheques, and
this Act contains a statutory definition of the
termbanker:bankerincludes a body of persons, whether incorporated
or not, who carry on the business of banking' (Section 2,
Interpretation). Although this definition seems circular, it is
actually functional, because it ensures that the legal basis for
bank transactions such as cheques does not depend on how the bank
is structured or regulated.The business of banking is in
manyEnglish common lawcountries not defined by statute but by
common law, the definition above. In other English common law
jurisdictions there are statutory definitions of thebusiness of
bankingorbanking business. When looking at these definitions it is
important to keep in mind that they are defining the business of
banking for the purposes of the legislation, and not necessarily in
general. In particular, most of the definitions are from
legislation that has the purpose of regulating and supervising
banks rather than regulating the actual business of banking.
However, in many cases the statutory definition closely mirrors the
common law one. Examples of statutory definitions: "banking
business" means the business of receiving money on current or
deposit account, paying and collecting cheques drawn by or paid in
by customers, the making of advances to customers, and includes
such other business as the Authority may prescribe for the purposes
of this Act; (Banking Act (Singapore), Section 2, Interpretation).
"banking business" means the business of either or both of the
following:1. receiving from the general public money on current,
deposit, savings or other similar account repayable on demand or
within less than [3 months] ... or with a period of call or notice
of less than that period;2. paying or collecting checks drawn by or
paid in by customers.[13]Since the advent ofEFTPOS(Electronic Funds
Transfer at Point Of Sale), direct credit,direct debitandinternet
banking, the cheque has lost its primacy in most banking systems as
a payment instrument. This has led legal theorists to suggest that
the cheque based definition should be broadened to include
financial institutions that conduct current accounts for customers
and enable customers to pay and be paid by third parties, even if
they do not pay and collect checks.[14]MeaningAbankis afinancial
intermediaryand money creator that creates money by lending money
to a borrower, thereby creating a correspondingdepositon the bank's
balance sheet. Lending activities can be performed directly by
loaning or indirectly throughcapital markets. Due to their
importance in thefinancial systemand influence on
nationaleconomies, banks arehighly regulatedin most countries. Most
nations have institutionalized a system known asfractional reserve
banking, under which banks hold liquid assets equal to only a
portion of their current liabilities. In addition to other
regulations intended to ensure liquidity, banks are generally
subject tominimum capital requirementsbased on an international set
of capital standards, known as theBasel Accords.Banking in its
modern sense evolved in the 14th century in the rich cities
ofRenaissance Italybut in many ways was a continuation of ideas and
concepts ofcreditandlendingthat had its roots in theancient world.
In thehistory of banking, a number ofbanking dynastiesnotably
theMedicis, theFuggers, theWelsers, theBerenbergs, and
theRothschildshave played a central role over many centuries.
Theoldest existingretail bankisMonte dei Paschi di Siena, while the
oldest existingmerchant bankisBerenberg Bank.
Types of banks[edit]
National Bank of the Republic,Salt Lake City1908
ATMAl-Rajhi Bank
National Copper Bank,Salt Lake City1911 Commercial banks: the
term used for a normal bank to distinguish it from an investment
bank. After theGreat Depression, the U.S. Congress required that
banks only engage in banking activities, whereas investment banks
were limited tocapital marketactivities. Since the two no longer
have to be under separate ownership, some use the term "commercial
bank" to refer to a bank or a division of a bank that mostly deals
with deposits and loans from corporations or large businesses.
Community banks: locally operated financial institutions that
empower employees to make local decisions to serve their customers
and the partners. Community development banks: regulated banks that
provide financial services and credit to under-served markets or
populations. Land development banks: The special banks providing
Long Term Loans are calledLand Development Banks, in the short,
LDB. The history of LDB is quite old. The first LDB was started at
Jhang inPunjabin 1920. The main objective of the LDBs are to
promote the development of land, agriculture and increase the
agricultural production. The LDBs provide long-term finance to
members directly through their branches.[19] Credit
unionsorCo-operative Banks: not-for-profitcooperativesowned by the
depositors and often offering rates more favorable than for-profit
banks. Typically, membership is restricted to employees of a
particular company, residents of a defined area, members of a
certainunionor religious organizations, and their immediate
families. Postal savings banks: savings banks associated with
national postal systems. Private banks: banks that manage the
assets of high-net-worth individuals. Historically a minimum of USD
1 million was required to open an account, however, over the last
years many private banks have lowered their entry hurdles to USD
250,000 for private investors.[citation needed] Offshore banks:
banks located in jurisdictions with low taxation and regulation.
Many offshore banks are essentially private banks. Savings bank: in
Europe, savings banks took their roots in the 19th or sometimes
even in the 18th century. Their original objective was to provide
easily accessible savings products to all strata of the population.
In some countries, savings banks were created on public initiative;
in others, socially committed individuals created foundations to
put in place the necessary infrastructure. Nowadays, European
savings banks have kept their focus on retail banking: payments,
savings products, credits and insurances for individuals or small
and medium-sized enterprises. Apart from this retail focus, they
also differ from commercial banks by their broadly decentralized
distribution network, providing local and regional outreachand by
their socially responsible approach to business and society.
Building societiesandLandesbanks: institutions that conduct retail
banking. Ethical banks: banks that prioritize the transparency of
all operations and make only what they consider to be socially
responsible investments. ADirect or Internet-Only bankis a banking
operation without any physical bank branches, conceived and
implemented wholly with networked computers.Cards Banks provide
free ATM cum Debit Card to its customers who have deposit account
with them. This Card provides online access to savings or current
account. They can have access to the widest network of ATMs across
the country to withdraw cash, enquire about the account balance
etc. Banks are also having bilateral sharing arrangement with other
banks under this scheme Transactions limit varies from bank to
bank. The limit for withdrawal of money from State Bank of India
Card Rs 20,000/- per day. Holders of Elite Account in Centurion
bank Card can transact nearly one lakh per day. Some Banks provide
International ATM-cum-Debit Card which can be used within as well
as outside India, at a nominal fee. ATM Cards enables the customer
to shop at a large number of Merchant Establishment in India.
Insurance
Insurance is a kind of investment and is getting popular among
the customers of banks. Insurance can be for life or for fixed
assets. Banks do services for life insurance. In earlier days
people used to go for life insurance with Life Insurance
Corporation of India.; But now, banks also have entering into the
insurance business. ICICI Prudential Life Insurance is one such
example. Life Insurance is a unique investment that helps customers
to meet their dual needs saving for lifes important goals. and
coverage of risk. It helps ones family remain protected from
circumstances such as loss of income due to critical illness,
retirement and even after the death of the policyholder. Property
insurance help in protecting at the assets.
Demat Services
Banks have come forward to offer Demat services to its customer.
Demat account is opened for the purpose of buying and selling
stocks/shares of companies. Under this, the following facilities
are provided to the customers.
(i) E-Instructions One can transfer securities 24 hours a day, 7
days a week through Internet & Interactive Voice Response (IVR)
at a lower cost. Now with Speak to transfer, one can also transfer
or pledge instruction through customer care officer of the
concerned bank
(ii)Consolidation of Demat Account
Under this one can Dematerialize the physical shares in various
holding patterns and consolidate all such scattered holdings into
primary demat account at reduced cost.
(iii)Digitally Signed StatementOne can receive account statement
and bill by email.
(iv)Corporate Benefit Tracking.One can track dividend, interest,
bonus etc through ones account statement.
(v) Mobile Request Access ones Demat account by sending SMS to
enquire about Holdings, Transactions, Bill & ISIN details.
Mobile Alerts
Receive SMS alerts for all debits/credits as well as for any
request which cannot be processed.
Banks in alliance with Securities Limited Organisations
introduce a State of-the-Art online trading platform to cater to
every trading need and offer a truly world class experience of
online investing- anyplace, anytime. This service ;provides with a
3-in-1 account which is an integrated platform of Bank Account,
Demat Account and an Online Trading Account to give customers a
convenient and paper free trading experience under one roof. This
will help the customer to trade from the comfort of home or office
through the Internet. Buying and selling of shares is now just a
click away distance. Apart from online trading account advantage,
customers will get the added advantage of a Savings and Demat
account also.
(vi) Online Services
Transaction at the convenience of customers, saving times and
cost through Computers is popularly known as Online Banking. It is
also known as E-Banking or Net Banking or internet Banking. It is
done through a computer with internet facilities. Customers can
monitor and control their funds through Internet Banking. They can
check account balance, view their account, Get summary statement,
make bill payments and utility payments, request for Cheque book,
drafts, Bankers Cheques, stop cheque payment transfer funds,
request for third party transfers, invest and renew deposits, issue
standing instructions, register mobile number for SMS alerts and
many more attractive features. User-Id and Password are given by
the banks to the customer for operation of account after they
successfully register with the bank
(vii) NRI Banking A Non Resident Indian(NRI) as per FEMA 1999 is
an Indian citizen or Foreign National of Indian Origin resident
outside India for purpose of employment, carrying on business or
vocation in circumstances as would indicate an intention to stay
outside India for an Indefinite period. An Individual will also be
considered as NRI if his/ her stay in India is less than 182 days
during the proceeding financial year.
Banks allow NRIs to open an NRI account when they complete the
account opening formalities. A customer for this purchase a form
has to be filled up in which the information soughtly the bank is
provided. . They can open a NRI Saving Bank Account, Current
Account, Fixed Deposits in Indian Rupees, Fixed Deposits in Foreign
Currency, NRO account ( Rupee accounts for crediting income in
India) Money can be transferred either through on line or drafts or
telegraphically or by wire transfer or Cheques. E-Transfer is
completely online, paperless money transfer service which enables
the customer to send money directly from one bank account in
foreign country to India. Drafts in Indian rupees can be purchased
from exchange companies of one country and mailed to the branch of
another country where the customer has the account. Telegraphic or
wire transfers can be made through branch to branch. Cheques can be
deposited for credit of the customers accounts and the Cheques will
be collected and credited to their accounts.
RADITIONAL BANKS:The first financial intermediaries to function
as depository institutions, maintain deposits, make loans, and
directly control the checkable deposits portion of the economy's
money supply. Traditional banks were THE original banks, the
financial depository institutions first to offer checkable
deposits. Traditional banks invariably have the word "bank" in
their names and are charted by either the Comptroller of the
Currency or one of the fifty state corporation commissions. Three
other types of banks, as a group commonly termed thrift
institutions, are credit unions, savings and loan associations, and
mutual savings banks.Other Banking ServicesMoney Orders and
Cashier's ChecksMoney orders are available to both Commerce
customers and non-customers for a nominal fee. Cashier's Checks are
available to Commerce Customers for a fee as well. Please check
with your local branch for a current listing of fees. Select
locations in Kansas City and St. Louis also provide foreign bank
drafts for a fee. You must be a Commerce customer as the funds are
directly debited from your Commerce account. Call your local branch
for availability and fees.Direct Deposit Fast and hassle-free
deposit of your paycheck or federal government checks directly into
your checking and/or savings account Saves you time More secure and
reliable than postal mail Helps prevent identity theft Contact your
employers payroll department use ourDirect Deposit Authorization
Form[PDF]to make it easierSafe Deposit BoxesCommerce Bank offers
safe deposit boxes to customers as a secure way to store valuables
and other personal possessions. Safe deposit boxes provide peace of
mind because they are maintained within a bank and because they can
only be accessed when the customer is present with their key AND a
bank employee is present with the banks guard key.If youre
interested in a safe place for your valuables, please visit
yourlocal branch, and your Commerce Banker will be happy to speak
with you about a safe deposit box. Boxes are priced by
size.Benefits of Pradhan Mantri Jan Dhan account for the
IndiansAugust 29, 2014Jan-Dhan Yojana,PMJDY's BenefitsJan-Dhan
Yojana Name Competition,Mera Khata Scheme - PM India,Mera Khata
Bhagya Vidhaata,Sabka Bank KhataHere aremain key benefits of
PMJDY-Pradhan MantriJan Dhan account for the IndiansThe Most
Benefits of Pradhan Mantri Jan Dhan account for the Indians:-It is
a zero balance account.The Prime Minister said Indians had a habit
of saving, and thinking about the future of their children.Opening
of bank accounts of 1.5 crore individuals may be a massive record
within the banking historyCorruption is negated with the direct
deposit of welfare cash into the poor mans account.Continue
readingLeave a commentAbout Indian PM Narendra Modi Jan Dhan Yojna
2014August 29, 2014Jan-Dhan Yojana,PMs SpeechMera Khata Bhagya
Vidhaata,Sabka Bank KhataOur honble Prime Minister Narendra Modi on
Thursday 28 Aug 2014 unveiled thePradhan Mantri Jan Dhan Yojana
PMJDY across 76 centers across the India. On the occasion, he spoke
to the nation from New Delhis Vigyan Bhawan.
Prime Minister Narendra Modi releases publications at the launch
of Pradhan Mantri Jan Dhan Yojana in New DelhiBenefits of Pradhan
Mantri Jan Dhan YojanaThe Pradhan Mantri Jan Dhan Yojana scheme,
which envisages every account holder gets aRepay debit cardwith a
Rs.1 lakh accident cover, will see the nationalized banks target
opening of one crore bank accounts.There is an urgency to this
exercise as all other development activities are hindered by this
single disability, he had said in a Twitter post.By paying benefits
directly into bank accounts, the scheme would seek to cut waste and
corruption that inflate Indias $43 billion subsidy bill, equivalent
to more than 2 per cent of its GDP, for handouts of grain, fuel and
fertilizer.The push for greater financial inclusion would also
diminish the influence of moneylenders and other informal financing
channels who operate outside the ambit of the Reserve Bank of India
(RBI), blunting its monetary policy tools.Deposits For investment
of surplus funds or to create a fund for future needs like
childrens education and marriage, construction of house, business,
etc one can find plenty of opportunities to deposit money banks
under various deposit schemes. Now a days almost all banks are
computerized, core banking/ network banking system is introduced
which helps the people to deposit money at their own convenient
locations. Types of Deposits The following are some of the deposit
schemes available in banks:1. Current Account2. Savings Account3.
Term Deposit/Fixed Deposit/ Recurring Deposit Account4. Multi
Option Deposit Account
The first three accounts were already discussed in Class XI and
the last type is discussed below:
Multi Option Deposit Scheme is a term deposit which is not fixed
at all and comes with a unique break-up facility which provides
full liquidity as well as benefit of higher rate of interest,
through the savings bank account. One can also keep that deposit
intact by availing an overdraft facility, to meet occasional
temporary funds requirements. Individual banks have their own
deposit schemes to suit the current as well as future needs of the
people. You may visit nearby branches of the banks and collect
information about different types of deposit accounts to ascertain
the comparative advantages and limitations of the different types
of deposit schemes.
Loans Banks have variety of schemes under Personal Finance to
satisfy varying needs of the banking public. Banks provide credit
in the form of overdraft or loans. Overdraft facility is generally
provided on current account. Overdraft is a service provided by a
bank to utilize money even when there is no balance in the
customers account. It is a form of credit and one has to pay
interest for the overdraft drawn. It is an arrangement made to
cover the cash shortages. The rates differ from bank to bank and
depend on the time period also. It is not suitable for long period
of time. Bank loan is the money which one borrows from the bank for
a specific purpose for specific period with agreement for interest
and repayment periods etc.
Types of Loans
Following are some of the popular loan schemes offered by
banks:
1. Housing Loans: Finance is provided for purchase of a new
House. Loan is also given for the purchase of land and
constructions of house on the same. The rates of interest to be
charged depends on two factors firstly the amount of loan and
secondly the time period for which the loan is required. The rate
of interest may be fixed or fluctuating. In case of fixed rate of
interest the interest rate remain the fixed throughout the period
of loan inspite of the fact that the current rate of interest may
be different the rate at which the loan was obtained. In case of
fluctuating rate of interest the rate of interest changes according
to the current rate in the market.2. Personal Loan : Finance is
provided to meet out all personal needs like renovating the house,
purchasing a computer, marriage or medical expenses etc.3. Travel
Loan : Finance is provided to meet out the travel cost of the
customers either domestic or for international visits.4. Car
Loan/Vehicle Loan : Finance is provided for purchase of car or
other vehicles either for personal or business purposes.5.
Education Loan : Finance is provided to meet out the education cost
of children of the customers.6. Festival Loans : Finance is also
given to meet out the festival expenses.
Investments
Now a days bank also participates in the activities ofinvestment
at national or international level of investment banks. They help
companies and government to raise money by issuing and selling
securities in the capital markets. They provide necessary financial
guidance to its customers for effective investments in Stock and
Mutual Funds. Some banks also have specialized offices for this
purposeCards Banks provide free ATM cum Debit Card to its customers
who have deposit account with them. This Card provides online
access to savings or current account. They can have access to the
widest network of ATMs across the country to withdraw cash, enquire
about the account balance etc. Banks are also having bilateral
sharing arrangement with other banks under this scheme Transactions
limit varies from bank to bank. The limit for withdrawal of money
from State Bank of India Card Rs 20,000/- per day. Holders of Elite
Account in Centurion bank Card can transact nearly one lakh per
day. Some Banks provide International ATM-cum-Debit Card which can
be used within as well as outside India, at a nominal fee. ATM
Cards enables the customer to shop at a large number of Merchant
Establishment in India.
Insurance
Insurance is a kind of investment and is getting popular among
the customers of banks. Insurance can be for life or for fixed
assets. Banks do services for life insurance. In earlier days
people used to go for life insurance with Life Insurance
Corporation of India.; But now, banks also have entering into the
insurance business. ICICI Prudential Life Insurance is one such
example. Life Insurance is a unique investment that helps customers
to meet their dual needs saving for lifes important goals. and
coverage of risk. It helps ones family remain protected from
circumstances such as loss of income due to critical illness,
retirement and even after the death of the policyholder. Property
insurance help in protecting at the assets.
Demat Services
Banks have come forward to offer Demat services to its customer.
Demat account is opened for the purpose of buying and selling
stocks/shares of companies. Under this, the following facilities
are provided to the customers.
(ii) E-Instructions One can transfer securities 24 hours a day,
7 days a week through Internet & Interactive Voice Response
(IVR) at a lower cost. Now with Speak to transfer, one can also
transfer or pledge instruction through customer care officer of the
concerned bank
(ii)Consolidation of Demat Account
Under this one can Dematerialize the physical shares in various
holding patterns and consolidate all such scattered holdings into
primary demat account at reduced cost.
(iii)Digitally Signed StatementOne can receive account statement
and bill by email.
(iv)Corporate Benefit Tracking.One can track dividend, interest,
bonus etc through ones account statement.
(v) Mobile Request Access ones Demat account by sending SMS to
enquire about Holdings, Transactions, Bill & ISIN details.
Mobile Alerts
Receive SMS alerts for all debits/credits as well as for any
request which cannot be processed.
Banks in alliance with Securities Limited Organisations
introduce a State of-the-Art online trading platform to cater to
every trading need and offer a truly world class experience of
online investing- anyplace, anytime. This service ;provides with a
3-in-1 account which is an integrated platform of Bank Account,
Demat Account and an Online Trading Account to give customers a
convenient and paper free trading experience under one roof. This
will help the customer to trade from the comfort of home or office
through the Internet. Buying and selling of shares is now just a
click away distance. Apart from online trading account advantage,
customers will get the added advantage of a Savings and Demat
account also.
(vi) Online Services
Transaction at the convenience of customers, saving times and
cost through Computers is popularly known as Online Banking. It is
also known as E-Banking or Net Banking or internet Banking. It is
done through a computer with internet facilities. Customers can
monitor and control their funds through Internet Banking. They can
check account balance, view their account, Get summary statement,
make bill payments and utility payments, request for Cheque book,
drafts, Bankers Cheques, stop cheque payment transfer funds,
request for third party transfers, invest and renew deposits, issue
standing instructions, register mobile number for SMS alerts and
many more attractive features. User-Id and Password are given by
the banks to the customer for operation of account after they
successfully register with the bank
(vii) NRI Banking A Non Resident Indian(NRI) as per FEMA 1999 is
an Indian citizen or Foreign National of Indian Origin resident
outside India for purpose of employment, carrying on business or
vocation in circumstances as would indicate an intention to stay
outside India for an Indefinite period. An Individual will also be
considered as NRI if his/ her stay in India is less than 182 days
during the proceeding financial year.
Banks allow NRIs to open an NRI account when they complete the
account opening formalities. A customer for this purchase a form
has to be filled up in which the information soughtly the bank is
provided. . They can open a NRI Saving Bank Account, Current
Account, Fixed Deposits in Indian Rupees, Fixed Deposits in Foreign
Currency, NRO account ( Rupee accounts for crediting income in
India) Money can be transferred either through on line or drafts or
telegraphically or by wire transfer or Cheques. E-Transfer is
completely online, paperless money transfer service which enables
the customer to send money directly from one bank account in
foreign country to India. Drafts in Indian rupees can be purchased
from exchange companies of one country and mailed to the branch of
another country where the customer has the account. Telegraphic or
wire transfers can be made through branch to branch. Cheques can be
deposited for credit of the customers accounts and the Cheques will
be collected and credited to their accounts.
(viii) Corporate Banking
Banks provide facilities to Corporate houses for different
purposes. Banks are offering financial services for new projects as
well as expansion, diversification and modernization of existing
projects in infrastructure and non-infrastructure sectors for
economic development of our country. Infrastructure sector includes
Road & Urban Infrastructure, Power and Utilities, Oil & Gas
and other natural resources, Ports and Airports and
Telecommunications. Non-infrastructure sector includes
Manufacturing i.e. cement, steel, mining, engineering, auto
components, textiles, Pulp & Papers, Chemical &
Pharmaceuticals etc; Services i.e. Tourism & Hospitality,
Educational Institutions, Health Industry etc.
(ix) Corporate Net Banking
Most banks such as SBI and other banks offer Internet Banking
for corporate too. Corporate can empower officers identified by
them to operate online one or more of their accounts at one or more
networked branches of the Bank. The company appoints a regulator or
super-boss for corporate Internet banking. The powers are defined
and their limits are specified for transaction.(x) Cash
Management
Cash Management is managing a companys short term resources to
sustain its ongoing activities, mobilize funds and optimize
liquidity. Cash Management comprises of accelerating and
efficiently collecting cash inflows concentrating collected funds;
Controlling the timing of cash outflows; forecasting the position;
securing adequate sources of short-term funds; optimizing use of
any temporary cash surpluses; gathering timely information;
implementing the system and services necessary to monitor, manage,
and control the cash position; ensuring the internal and external
transfer of financial data.
(xi) Trade Services
Banks continued to play a key role in International Trade also.
Banks provide trade services through their experts teams backed by
advanced technology, global network distribution and comprehensive
range of import and export products and services. One of the
example is HSBC Trade Service. They offer a broad range of
trailer-made technology-based solutions that bring enormous
benefits to both importers and exporters in improving the
management of the total supply chain. (xii )Forex Online
Forex means Foreign Exchange. Forex market is very large and
growing. Trading is conduct mostly either through telephones or
through electronic trading networks. Banks, Insurance companies and
other financial institutions use the forex market to manage the
risks associated with fluctuations in currency rates. Foxes trading
involve high level of risk and may not be suitable for untrained
investors. It requires constant monitoring and to understand the
relationship between the currencies and their rates. Before start
trading one has to open an account with a forex dealer. The
investor should have constant touch with currency exchange rates
since there will be lot of fluctuations in the exchange rates. If
one is not cautious he/she may loose money. If one is using
Internet based or other electronic system for trading, in the event
of system failure, one may loose orders or order priority and
result in loss of investments too. The investor should also know
about the foreign currency scam to avoid losses.
(xii) SME Services
SME means Small and Medium Enterprises. The Bank finances for
Small Business activities which are of special significance to a
large number of people as many of these activities can be started
with relatively lower investment and with no special skills on the
part of the entrepreneurs. This includes loan to traders to meet
normal business requirements. Large number of small and medium
enterprises are working in our country. These enterprises are a
source of employment to the local people. Such enterprises mainly
adopt labour intensive techniques even than finances are required
by them to meet long term as well as short-term credit
requirements. Banks provide a variety of facilities through the SME
Service.
CHAPTER 9: Regulatory Authority-Reserve Bank of India(RBI) The
RBI plays an important part in the Development Strategy of
theGovernment of India. It is a member bank of the Asian Clearing
Union. The general superintendence and direction of the RBI is
entrusted with the 20-member Central Board of Directors:
theGovernor(Dr. Raghuram Rajan), 4 Deputy Governors, 1Finance
Ministryrepresentatives, 10 government-nominated directors to
represent important elements from India's economy, and 4 directors
to represent local boards headquartered at Mumbai, Kolkata, Chennai
and New Delhi. Each of these local boards consists of 5 members who
represent regional interests, and the interests of co-operative and
indigenous banks.The bank is also active in promoting financial
inclusion policy and is a leading member of theAlliance for
Financial Inclusion(AFI).
Role and Function of the Reserve Bank of India (RBI) In every
country there is one organization which works as the central bank.
The function of the central bank of a country is to control and
monitor the banking and financial system of the country. In India,
the Reserve Bank of India (RBI) is the Central Bank. The RBI was
established in 1935. It was nationalised in 1949. The RBI plays
role of regulator of the banking system in India. The Banking
Regulation Act 1949 and the RBI Act 1953 has given the RBI the
power to regulate the banking system. The RBI has different
functions in different roles. Below, we share and discuss some of
the functions of the RBI.(1) RBI is the Regulator of Financial
SystemThe RBI regulates the Indian banking and financial system by
issuing broad guidelines and instructions. The objectives of these
regulations include: Controlling money supply in the system,
Monitoring different key indicators like GDP and inflation,
Maintaining peoples confidence in the banking and financial system,
and Providing different tools for customers help, such as acting as
the Banking Ombudsman.(2) RBI is the Issuer of Monetary PolicyThe
RBI formulates monetary policy twice a year. It reviews the policy
every quarter as well. The main objectives of monitoring monetary
policy are: Inflation control Control on bank credit Interest rate
controlThe tools used for implementation of the objectives of
monetary policy are: Cash Reserve Ratio (CRR) and Statutory
Liquidity Ratio (SLR), Open market operations, Different Rates such
as repo rate, reverse repo rate, and bank rate.(3) RBI is the
Issuer of CurrencySection 22 of the RBI Act gives authority to the
RBI to issue currency notes. The RBI also takes action to control
circulation of fake currency.(4) RBI is the Controller and
Supervisor of Banking Systems The RBI has been assigned the role of
controlling and supervising the bank system in India. The RBI is
responsible for controlling the overall operations of all banks in
India. These banks may be: Public sector banks Private sector banks
Foreign banks Co-operative banks, orRegional rural banks
