Economics(BANKING,RBI, FUNCTION AND MONETARY POLICY OF RBI)

Banking
SBI ←←←IMPERIAL BOI ←←←PRESIDENCY BANK→(Bank of Madras, Bank of Bombay, Bank of Bengal)

1959→ GOI take over 7 Associates of SBI
2008 →State Bank of Saurashtra merged with SBI
2010 →State Bank of Indore merged with SBI

1st April 2017 =all 5 Associates including BMP were merged with SBI.

5 Associates of SBI

Learn shortcut (HMT BJP)

1. State Bank of Bikaner and Jaipur
2. State Bank of Hyderabad
3. State Bank of Mysore.
4. State Bank of Patiala
5. State Bank of Travancore.

FIRST NATIONALISATION OF BANK IN INDIA 19 JULY IN 1969
Bank =14
committee =
capital =50 crore

SECOND NATIONALISATION OF BANK IN INDIA 15 APRIL IN 1980.
Bank =6
committee= Narasimha
capital =200 crore
 present =500 crore

NEW BANK OF INDIA MERGED WITH PNB= 4 SEPTEMBER 1993.

GOVERNMENT BANK=19+IDBI+SBI=21

NATIONALISED BANK

Allahabad, Union Bob BOI PNB Indian Overseas Bank Oriental Bank of Commerce Canada Syndicate p and Sind Corporation Bank of Maharashtra United commercial bank United Central Bank Vijaya Andhra Indian Bank Dena Bank

Shortcut to learn (BUC3  papa  VIDIOS)

RRB REGIONAL RURAL BANK
Established in 1975 2 October

Moradabad(u.p)→first RRB name Prathama

Gorakhpur(u.p)
Malda(W.B)
Bhiwari(Haryana)
Jaipur (Rajasthan)

RRB
→CENTRAL GOVERNMENT 50%
→STATE GOVERNMENT 15%
→SPONSOR BANK 35%

RBI

Established 1st April 1935
Capital 5 crore
Committee Hilton young Commission
First h o Kolkata (1935 to 37)
Present h o Mumbai 1937 to present
First governor Osborne Smith 1935 to 37
First Indian governor CD Deshmukh 1943 to 49

RBI is working at Central Bank of India 1st Jan 1949

BANKING REGULATION ACT 1949

MANAGEMENT OF RBI 21

One governor
For Deputy Governor
Two director from Finance Ministry
4 director from 4 local board (DMCK)
10 director from various field

DMCK(Delhi Mumbai Chennai Kolkata)

FOR DEPUTY GOVERNOR
1. SP kanungo
2. SS Mundra
3. NS Vishwanathan
4. Viral Acharya

FUNCTION OF RBI

1. Issuer of bank notes→Except rupee1→Ashok Lavasa
2. Bankers to government
3. Bankers to bank
4. Controller of credit
5. Custodian of foreign reserve→FEMA→FOREIGN EXCHANGE MANAGEMENT
6. Lender of last resort

DECIMAL CURRENCY SYSTEM IN 1957
NOTE ISSUE →MRS
MRS→minimum reserve system

Gandhi Note series started 1996

Design of note decided by government of India

How many language on Note 17

How many language on Note panel 15
RBI can issue maximum 10000 Rs notes
Till 2005 Note series has to return to bank till 31st December 2016 and to RBI till 31 March 2017 (500 Rs and 1000 RS)

RBI logo includes palm tree and tiger

Back of 50 notes is parliament
Logical system present in 100 Rs notes

Rs 100 =4 lines both side
Rs 500=5 line both side
Rs 1000 =6 line both side
Rs 2000 =7 line both side

Notes are printed in:
Nashik (Maharashtra)
Dewas (Madhya Prades
Mysore (Karnataka)→SPMCIL
Salboni (West Bengal)→BRBNMPL

SPMCIL=SECURITY PRINTING AND MINTING CORPORATION OF INDIA LIMITED (GOI)

BRBNMPL=BHARATIYA RESERVE BANK NOTE MUNDRAN PRIVATE LIMITED (RBI)

MONETARY POLICY OF RBI

Main objective of monetary policy is to manage liquidity of money according to requirement of market.

1. Quantitative/General

Bank rate
Repo rate
Reserve repo rate
MSF
CRR (RBI)
SLR
OMO

2. Qualitative/selective

Credit rationing
Margin requirement
Moral suasion
Direct action
Publicity

MSF=Marginal standing Facility.
CRR=cash reserve ratio.
SLR=statutory liquidity ratio.
OMO=open market operation.

BANK RATE
The rate on which RBI offer loan to Commercial Bank for long period of time without taking any mortgage more than 90 days.

REPO RATE
The date on which RBI of Alone 2 CBs for short period of time with mortgage.

REVERSE REPO RATE
The rate on which RBI accept CBs deposit or the rate on which RBI take loan from CBs.

MSF
It is an emergency loan in which RBI give loan to CBs for overnight with government securities but maximum 2% of total deposit (NDTL).

CRR
All CBs has two reserve some percent of total deposits in RBI but only in cash form.

SLR
All CBs has to reserve some percent of total deposits with itself but in the form of cash, gold, certificate, SDR etc..

SDR=Special drawing right

Currency of IMF =SDR
Paper gold =SDR
SDR=(dollar, euro ,pound, Yen, yuan)

OMO
In this RBI manage liquidity of money through buy and sell of government security.

RBI WILL SELL GOVERNMENT SECURITIES WHEN LIQUIDITY OF MONEY IS MORE IN MARKET.

ARABI I FEEL BY GOVERNMENT SECURITIES WHEN LIQUIDITY OF MONEY IS LESS IN MARKET.

INTEREST RATE POLICY
Bank rate 6.25%
RR 6%
RRR 5.75%
MSF 6.25%

RESERVE RATE POLICY
CRR 4%
SLR  20%
OMO

Monetary policy→review→Bi-monthly/60 days

Inflation↑        Rate↓

MEASUREMENT OF SUPPLY OF MONEY

M1=currencies with public + demand deposit with CBs + other deposit with RBI
Most liquid= Narrow money

M2=M1 +net time deposit with CBs.

M4=M3 +total deposits with post office excluding. NSC (national saving certificate)
Least liquid=Broad money.





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