Organisation and Functions

	Establishment
	Preamble
	Central Board
	Board for Financial Supervision
	Board for Payment and Settlement Systems
	Profile of Central Board Directors
	Local Boards
	Sitting Fees and Halting Allowance of Board Directors/Members
	Legal Framework
	Main Functions
	Departments
	Offices
	Training Establishments
	Subsidiaries

Establishment

Preamble

The Preamble of the Reserve Bank of India describes the basic functions of the Reserve Bank as:

"to regulate the issue of Bank notes and keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage; to have a modern monetary policy framework to meet the challenge of an increasingly complex economy, to maintain price stability while keeping in mind the objective of growth."

Central Board

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.

• Appointed/nominated for a period of four years
• Constitution:
  • Official Directors
    • Full-time : Governor and not more than four Deputy Governors
  • Non-Official Directors
    • Nominated by Government: ten Directors from various fields and two government Officials
    • Others: four Directors - one each from four local boards

Functions : General superintendence and direction of the Bank's affairs

• Profile of Central Board Directors

Local Boards

Functions : To advise the Central Board on local matters and to represent territorial and economic interests of local cooperative and indigenous banks; to perform such other functions as delegated by Central Board from time to time.

Sitting Fees and Halting Allowance of Board Directors/Members

Board for Financial Supervision

The Reserve Bank of India performs the supervisory 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 under the Reserve Bank of India (Board for Financial Supervision) Regulations, 1994.

Objective

The primary objective of BFS is to undertake consolidated supervision of the financial sector comprising Scheduled Commercial and Co-operative Banks, All India Financial Institutions, Local Area Banks, Small Finance Banks, Payments Banks, Credit Information Companies, Non-Banking Finance Companies and Primary Dealers.

Constitution

The Board is constituted by co-opting four Directors from the Central Board as Members and is chaired by the Governor. The Deputy Governors of the Reserve Bank are ex-officio members. One Deputy Governor, traditionally, the Deputy Governor in charge of supervision, is nominated as the Vice-Chairman of the Board.

In April 2018, a Sub-committee of the Board for Financial Supervision was constituted, under Para 11 & 12 of the Reserve Bank of India (Board for Financial Supervision) Regulations, 1994. The Sub-committee performs the functions and exercises the powers of supervision and inspection under the Reserve Bank of India Act, 1934 and the Banking Regulation Act, 1949, in relation to Payments Banks, Small Finance Banks, Local Area Banks, small Foreign Banks, select scheduled Urban Co-operative Banks, select Non-Banking Financial Companies and Credit Information Companies. The Sub-committee is chaired by the Deputy Governor in charge of supervision and includes the three Deputy Governors and two Directors of the Central Board as Members.

BFS Meetings

The Board is required to meet normally once every month. It deliberates on inspection reports, periodic reviews related to banking and non-banking sectors and policy matters arising out of or having relevance to the supervisory functions of the Reserve Bank.

The BFS oversees the functioning of Department of Banking Supervision (DBS), Department of Non-Banking Supervision (DNBS) and Department of Co-operative Bank Supervision (DCBS) and gives directions on regulatory and supervisory issues.

Functions

Some of the initiatives taken by the BFS include:

1. Fine-tuning the supervisory processes adopted by the Bank for regulated entities;

2. Introduction of off-site surveillance system to complement the on-site supervision of regulated entities;

3. Strengthening the statutory audit processes of banks and enlarging the role of auditors in the supervisory process;

4. Strengthening the internal defences within supervised institutions such as corporate governance, internal control and audit functions, management information and risk control systems, review of housekeeping in banks;

5. Introduction of supervisory rating system for banks and financial institutions;

6. Supervision of overseas operations of Indian banks, consolidated supervision of banks;

7. Technical assistance programme for cooperative banks;

8. Introduction of scheme of Prompt Corrective Action Framework for weak banks;

9. Guidance regarding fraud risk management framework in banks;

10. Introduction of risk based supervision of banks;

11. Introduction of an enforcement framework in respect of banks;

12. Establishment of a credit registry in respect of large borrowers of supervised institutions; and

13. Setting up a subsidiary of RBI to take care of the IT requirements, including the cyber security needs of the Reserve Bank and its regulated entities, etc.

Legal Framework

I. Acts administered by Reserve Bank of India

II. Other relevant Acts

• Negotiable Instruments Act, 1881
• Bankers' Books Evidence Act, 1891
• State Bank of India Act, 1955
• Companies Act, 1956/ Companies Act, 2013
• Securities Contract (Regulation) Act, 1956
• State Bank of India Subsidiary Banks) Act, 1959
• Deposit Insurance and Credit Guarantee Corporation Act, 1961
• Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970
• Regional Rural Banks Act, 1976
• Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980
• National Bank for Agriculture and Rural Development Act, 1981
• National Housing Bank Act, 1987
• Recovery of Debts Due to Banks and Financial Institutions Act, 1993
• Competition Act, 2002
• Indian Coinage Act, 2011 : Governs currency and coins
• Banking Secrecy Act
• The Industrial Development Bank (Transfer of Undertaking and Repeal) Act, 2003
• The Industrial Finance Corporation (Transfer of Undertaking and Repeal) Act, 1993

Main Functions

Monetary Authority:

Regulator and supervisor of the financial system:

Manager of Foreign Exchange

Issuer of currency:

Developmental role

• Performs a wide range of promotional functions to support national objectives.

Regulator and Supervisor of Payment and Settlement Systems:

• Introduces and upgrades safe and efficient modes of payment systems in the country to meet the requirements of the public at large.
• Objective: maintain public confidence in payment and settlement system

Related Functions

Offices

• Has 27 regional offices, most of them in state capitals and 04 Sub-offices.

Training Establishments

Has six training establishments

For details on training establishments, please check their websites links which are available in Other Links.

Subsidiaries

Fully owned: Deposit Insurance and Credit Guarantee Corporation of India (DICGC), Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL), Reserve Bank Information Technology Private Limited (ReBIT), Indian Financial Technology and Allied Services (IFTAS), Reserve Bank Innovation Hub (RBIH).