Reserve Bank of India (RBI) Consulting Services

RBI (Reserve Bank of India) was set up in 1935, according to the Reserve Bank of India Act, 1934 provision. Since 1937 its central office is in Mumbai. Originally it was owned privately but after the nationalization in 1949, it is completely regulated by Government of India.

RBI was nationalized in 1949. The general superintendence of the Bank is in responsible to Central Board of Directors comprising of 20 members, one Government official from the Ministry of Finance, the Governor and four Deputy Governors, 10 nominated Directors by the Government which are selected for giving output on major economic life of the country. 4 nominated directors by the central government are appointed for representing 4 local Boards with Headquarters at Kolkata, Chennai, New Delhi and Mumbai. Local board comprise of 5 members. Each is appointed by the central Government for representing territorial, interest of co-operative and indigenous banks and economic interests.

As the supreme Bank authority, RBI enjoys the following powers:

• Controlling the credit operations of banks through qualitative and quantitative approach
• Acts as lender of last resort for scheduled banks as it provides them rediscount facilities.
• Supervise the banking system through licensing, calling for information and inspection
• It regulates and holds the cash reserve of the scheduled banks

The Reserve Bank of India Act which was commenced on 1 April, 1935 lay before the statutory basis of the bank’s functioning. The banks were established for the following purposes:

• For maintaining reserves in order to secure monetary stability
• For Regulating the bank note issue
• For operating currency and credit system to its advantage

FUNCTIONS OF RESERVE BANK OF INDIA

The Act of 1934 entrust all the important functions of the central bank (Reserve Bank of India)

• Bank of Issue
• Banker to government
• Controller of Credit
• Lender of the last Resort
• Supervisory functions
• Custodian of Foreign Reserves
• Promotional Functions

CLASSIFICATION OF RBI FUNCTIONS

The functions which are monetary also called as the central banking functions of the RBI relates to control and regulation of money and credit, i.e., control of bank credit, controls, issue of currency of F.E. (foreign exchange) operations, banker to the govt. (Government) and to the money market. Monetary functions of the RBI are the most significant part as they control and regulate the volume of money and credit in the country.

The non-monetary functions are equally important in relation with India’s economic backwardness. The supervisory function of the RBI is mostly regarded as non-monetary function. The establishment of flawless banking system in India accounts to the primary motive of RBI. Under the Banking Regulations Act, 1949, the RBI has been empowered with certain important functions like branch expansion, licensing of the banks, management, liquidity of their assets, reconstruction and liquidation, inspection and amalgamation. RBI’S strict supervision of the banks have resulted in effective functioning of the banks. The Commercial banks have developed to a commendable financial and operationally sound units. The RBI’s power is to supervise have now been increased to non-banking financial intermediaries. Since independence, particularly after its nationalization 1949, the RBI has followed the promotional functions vigorously and has been responsible for strong financial support to industrial and agricultural development in the country.

• Aim to ensure monetary and interest rate atmosphere prioritizing price stability, financial markets in perfect order, accurate anchoring of inflation expectations while concentrating on evaluation and attainment of growth momentum
• Formulation, implementation and supervising the monetary policy
• Maintaining Price Stability and ensuring sufficient credit flow to productive sectors
• Reply on regular basis from unfavorable international matters to the domestic situation, stressing on inflation expectations, growth momentum and financial stability covering both conventional and unconventional techniques
• Emphasis on credit delivery and quality particularly for employment intensive sectors along with pursuing financial inclusion
• To suggest central boards on local matters and local cooperative economic matters and indigenous banks and to represent territorial. Performing other services direction by Central Board at regular intervals.
• Authorization/ refusing the authorization of/to payment systems.
• To formulate certain policy focusing on promoting digital payment mode from paper-based payment systems
• Devising regulatory framework of fresh payment ways and initiatives
• Increasing the feasibility for the customers with regard to payment mode
• Strengthening the security in electronic and paper-based modes of payment

BENEFITS AND BENEFICIARIES OF RBI LEGAL COMPLIANCE FOR ORGNISATION

• It lay emphasis on approach and attitude
• Legal compliance assist business to function smoothly
• Business is the biggest beneficiary
• Compliance is a business enabler and not a burden!
• Society and stakeholders’ benefits
• Focus on business
• Building reputation for Corporate India

The non-compliance with RBI could result in stringent actions. Failure to comply with the statutory requirements of RBI can result in fines, penalties, and in the most extreme cases, imprisonment for the company, Directors and/or the officer-in-charge of the Company.