Summary of "Everything about Regulatory Bodies | Regulatory Bodies of India | RBI Grade B Preparation 2023"
Summary of “Everything about Regulatory Bodies | Regulatory Bodies of India | RBI Grade B Preparation 2023”
This video is a comprehensive crash course aimed at RBI Grade B aspirants, focusing on the regulatory bodies of India with a detailed emphasis on the Reserve Bank of India (RBI) and other key financial institutions. The session covers origins, organizational structure, regulatory frameworks, supervisory approaches, subsidiaries, and functions of RBI, followed by explanations of other regulatory bodies like SEBI, NABARD, SIDBI, NHB, EXIM Bank, and ECGC. The content is detailed and technical, suitable for revision and exam preparation.
Main Ideas, Concepts, and Lessons Conveyed
1. Introduction to Regulatory Bodies
Regulatory bodies are established to make rules, supervise, and regulate financial entities. Examples include:
2. Reserve Bank of India (RBI)
Origin
- Recommended by Hilton Young Commission (1926) to separate banking functions from government.
- RBI Act passed in 1934; came into force on January 1, 1935; RBI established on April 1, 1935.
- Nationalized in 1949 post-independence.
Organizational Structure
- Central Board of Directors with a maximum of 21 members.
- Governor is Chairman; includes Deputy Governors, executive and non-executive directors.
- 31 branches across India (4 zonal offices and 27 regional offices).
Functions of RBI
- Monetary policy formulation and implementation (expansionary and contractionary).
- Banker to banks and government.
- Management of currency (notes and coins).
- Regulation and supervision of banks and financial institutions.
- Custodian of foreign exchange reserves.
- Developmental role in agriculture, MSME, and financial inclusion.
Monetary Policy Tools
- Quantitative instruments: Repo rate, Reverse repo rate, Bank rate, Cash Reserve Ratio (CRR), Statutory Liquidity Ratio (SLR), Open Market Operations (OMO).
- Qualitative instruments: Margin requirements, credit rationing, moral suasion, direct action.
- Newer instruments: Operation Twist, Long Term Repo Operations (LTRO), Targeted Long Term Repo Operations (TLTRO).
Monetary Policy Committee (MPC)
- Six members (3 from RBI, 3 external) decide policy rates.
- Inflation targeting framework with a 4% target ±2%.
Supervision & Regulation
- Uses CAMELS framework:
- Capital adequacy
- Asset quality
- Management
- Earnings
- Liquidity
- Sensitivity to market risk
- Risk-Based Supervision (RBS) and SPARK program for scheduled commercial banks.
- Separate departments for banking, non-banking, and cooperative bank supervision.
- Payment and Settlement Systems regulated under Payment and Settlement Systems Act, 2007.
Subsidiaries of RBI
- Deposit Insurance and Credit Guarantee Corporation (DICGC).
- Bharatiya Reserve Bank Note Mudran Private Limited (banknote printing presses in Mysore and Salboni).
- Reserve Bank Information Technology (ReBIT).
- Indian Financial Technology and Allied Services (IFTAS).
- Reserve Bank Innovation Hub (set up in 2022 for financial inclusion and innovation).
3. Securities and Exchange Board of India (SEBI)
- Regulates capital markets and securities.
- Established as an executive body in 1988, statutory body in 1992.
- Powers include:
- Legislative (rule-making)
- Executive (implementation)
- Judicial (adjudication)
- Protects investors, regulates intermediaries, and enforces insider trading laws.
- Investor Education and Protection Fund (IEPF) for investor awareness.
- Rolling settlement cycle reduced from T+5 to T+1.
- Regulates collective investment schemes and mutual funds.
4. National Bank for Agriculture and Rural Development (NABARD)
- Apex development bank for agriculture and rural development (established 1982).
- Supervises Regional Rural Banks (RRBs) and cooperative banks.
- Provides refinance facilities to banks and financial institutions.
- Implements various funds and schemes for agriculture, irrigation, warehousing, micro-irrigation, and infrastructure development.
- Promotes financial inclusion via Kisan Credit Card, Self Help Group-Bank Linkage Program, and others.
- Subsidiaries include:
5. Small Industries Development Bank of India (SIDBI)
- Promotes and develops MSMEs (established 1990).
- Provides finance, credit guarantee, venture capital, and credit rating services for MSMEs.
Note: The summary ends abruptly regarding SIDBI subsidiaries; further details were not provided.
Category
Educational
