Banking Awareness Study Notes for Bank Exams |

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With SBI PO, NIACL Assistant, BOB PO, Dena Bank PO, NICL AO and Bank of India, they all have a General Awareness section which is heavily filled with Banking Awareness Questions. Here we will discuss some terms related to Reserve Bank of India (RBI); it will help you prepare well for upcoming Banking or insurance Examinations.

The Reserve Bank of India was established on April 01st, 1935 in accordance with the provisions of the Reserve Bank of India Act, 1934. The Central Office of the Reserve Bank was initially established in Calcutta but was permanently moved to Mumbai in 1937. The Central Office is where the Governor sits and where policies are formulated. Though originally privately owned, since nationalization in 1949, the Reserve Bank is fully owned by the Government of India. Osborne Smith was first Governor of RBI while C. D. Deshmukh was the first Indian governor.

Central Board of RBI

The Reserve Bank’s affairs are governed by a central board of directors. The board is appointed by the Government of India in keeping with the Reserve Bank of India Act.

Official Directors-

Full-time: One Governor and not more than four Deputy Governors. Urjit R. Patel is the present Governor of RBI and there are four deputy governors of RBI. These are-

1. S. S. Mundra

2. N. S. Vishwanathan

3. Viral V. Acharya

4. B.P. Kanungo

Financial Supervision

The Reserve Bank of India performs this function under the guidance of the Board for Financial Supervision (BFS). The Board was constituted in November 1994 as a committee of the Central Board of Directors of the Reserve Bank of India.

The primary objective of BFS is to undertake consolidated supervision of the financial sector comprising commercial banks, financial institutions, and non-banking finance companies.

Legal Framework

I. Acts administered by Reserve Bank of India

1. Reserve Bank of India Act, 1934

2. Public Debt Act, 1944/Government Securities Act, 2006

3. Government Securities Regulations, 2007

4. Banking Regulation Act, 1949

5. Foreign Exchange Management Act, 1999

6. Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (Chapter II)

7. Credit Information Companies (Regulation) Act, 2005

8. Payment and Settlement Systems Act, 2007

9. Factoring Regulation Act, 2011

II. Other relevant Acts

1. Negotiable Instruments Act, 1881

2. Bankers’ Books Evidence Act, 1891

3. State Bank of India Act, 1955

4. Companies Act, 1956/ Companies Act, 2013

5. Securities Contract (Regulation) Act, 1956

6. State Bank of India (Subsidiary Banks) Act, 1959

7. Deposit Insurance and Credit Guarantee Corporation Act, 1961

8. Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970

9. Regional Rural Banks Act, 1976

10. Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980

11. National Bank for Agriculture and Rural Development Act, 1981

12. National Housing Bank Act, 1987

13. Recovery of Debts Due to Banks and Financial Institutions Act, 1993

14. Competition Act, 2002

15. Indian Coinage Act, 2011: Governs currency and coins

16. Banking Secrecy Act

17. The Industrial Development Bank (Transfer of Undertaking and Repeal) Act, 2003

18. The Industrial Finance Corporation (Transfer of Undertaking and Repeal) Act, 1993

Main Functions of RBI

Monetary Authority:

Formulates implements and monitors the monetary policy. Maintaining price stability and ensuring adequate flow of credit to productive sectors.

Regulator and supervisor of the financial system:

Prescribes broad parameters of banking operations within which the country’s banking and financial system functions. Maintain public confidence in the system, protect depositors’ interest and provide cost-effective banking services to the public.

Manager of Foreign Exchange:

Manages the Foreign Exchange Management Act, 1999. To facilitate external trade and payment and promote orderly development and maintenance of foreign exchange market in India.

The issuer of currency:

Issues and exchanges or destroys currency and coins not fit for circulation. To give the public adequate quantity of supplies of currency notes and coins and in good quality. Developmental role performs a wide range of promotional functions to support national objectives.

Related Functions:

Banker to the Government: performs merchant banking function for the central and the state governments; also acts as their banker. Banker to banks: maintains banking accounts of all scheduled banks.

Fully-owned Subsidiaries of RBI

1. Deposit Insurance and Credit Guarantee Corporation of India (DICGC)

2. Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL)

3. National Housing Bank (NHB)

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