NET, IAS, State-SET (KSET, WBSET, MPSET, etc.), GATE, CUET, Olympiads etc.: Banking System
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Reserve Bank of India (RBI)
The RBI was established by passing “trasfer of public ownership Act” in Sep-1948 under which the ownership of the bank was passed into the hands of the Government of India with effect from 1st january 1949.
RBI Functions
- Traditional functions
- Monopoly of currency notes issue
- Banker to the Government (both the central and state)
- Agent and advisor to the Government
- Banker to the bankers
- Acts as the clearing house of the country
- Lender of the last resort
- Custodian of the foreign exchange reserves
- Maintaining the external value of domestic currency
- Controller of forex and credit
- Ensures the internal value of the currency
- Publishes the Economic statistical data
- Fight against economic crisis and ensures stability of indian economy.
- Promotional functions
- Promotion of banking habit and expansion of banking systems.
- Provides refinance for export promotion
- Expansion of the facilities for the provision of the agricultural credit through NABARD
- Extension of the facilities for the small scale industries
- Helping the Co-operative sectors.
- Prescribe the minimum statutory requirement.
- Innovating the new banking business transactions.
- Supervisory functions
- Granting licence to Banks.
- Inspects and makes enquiry or determine position in respect of matters under various sections of RBI and Banking regulations
- Implements Deposit insurence scheme
- Periodical review of the work of the commercial banks
- Giving directives to commercial banks
- Control the non-banking finance corporation
- Ensuring the health of financial system through on-site and off-site verification.
NBFCS (Non-Banking Financial Coorporations)
They are discribed by acronym: CAMELS
- C: Capital Adequacy requirement
- A: Asset quality like standerd ect. asset
- M: Management of the level and expertise and praisal capacity of management
- E: Earning capacity
- L: Liquidity, the level of liquidity and the components of liquidity are verified
- S: System and control exist in the NBFC, and its effectiveness.