The Reserve Bank of India is the Central Bank of the country, entrusted with the responsibility of monetary stability, the management of currency and the supervision of financial as well as the payments system.

The Reserve Bank of India was established on April 1, 1935, in accordance with the provisions of the Reserve Bank of India Act, 1934.

CHRONOLOGICAL ORDER OF EVENTS

1926 Birth of institution Hilton Young Commission

recommends setting up of the reserve bank of india

1935 The Reserve Bank of India is

established on April 1, and starts functioning.

1947 The Reserve Bank of India goes

national, as India gains independence.1949 The Reserve Bank of India is

nationalized.

2004-2005 RBI puts in a modern payment and

settlement system, strives to further strengthen the financial sector.

The Future Dream about the institution you work

for, dream about changes you could make to the Indian economy and strive to turn your dreams into reality.

MONETARY AUTHORITY OF THE COUNTRY

Monetary policy formulation is the central function

Monetary policy is a framework which represents policies, objectives and instruments directed towards regulating money supply and the cost and availability of credit in the economy.

ISSUER OF CURRENCY

It issues notes in the following denominations: Rs.2, Rs.5, Rs.10, Rs.20, and Rs.50, Rs.100, Rs.500, Rs.1000.

It acts as the sole currency authority or the monopoly authority in issuing currency in the country

BANKER TO GOVERNMENT

The Reserve Bank acts as a banker not only to the central government but also to the state governments.

BANKER TO BANK

The Reserve Bank maintains the banking accounts of all commercial and scheduled banks.

It has powers to regulate credit of banking companies.

The Reserve bank can appoint any bank as its agent.

CONTROLLER OF CREDIT

RBI is expected to correct inflationary or deflationary situation whenever they arise and achieve reasonable economic stability in the country.

For economic stability, RBI has to control the credit created by commercial banks with a view to maximize their profits.

MONETORY POLICY OF RBI Monetary policy is the one employed by

the State through its Central Bank, to control the supply of money as an instrument of achieving the objectives of the general economic policy. Such a policy strives at minimizing the disadvantage of increasing money supply and to maximizing the benefits resulting from the existence and operations of the monetary system.

HIGHLIGHTS OF THE ANNUAL POLICY OF THE RESERVE BANK OF INDIA FOR THE YEAR 2006-07 Bank Rate, Reverse Repo Rate, Repo Rate and

Cash Reserve Ratio kept unchanged. GDP growth projection for 2006-07 at 7.5-8.0 per

cent. Inflation to be contained within 5.0-5.5 per cent

during 2006-07. M3 projected to expand by around 15.0 per cent

for 2006-07. Deposits projected to grow by around Rs.3,30,000

crore for 2006-07.

TOOLS OF FISCAL POLICY

PUBLIC DEBT

PUBLIC REVENUE

PUBLIC EXPENDITURE

Tools of Fiscal Policy

Public Debt:When the government is unable to meet its public expenditure through public revenue, its resort to public debt, public debt can be raised with in the country or out side the country.

Public Revenue:It is the income of government through various sources like taxes, fees, profits of the state enterprise and grants.

Public Expenditure:It is the expenditure of the public authority on various socio-economic and political activities. Expenditure may be spending on administration of law and order development of industries etc.