Role of rbi in reulating commercial banks in india
Answers
Answered by
1
One of the most important functions of RBI is to work as regulator and supervisor of financial system. The financial system in India includes Commercial Banks, Regional Rural Banks, Local Area Banks, Cooperative Banks, Financial Institutions including Development Financial Institutions (DFIs) and Non-Banking Financial Companies.
RBI derives its regulating powers for Indian Banking System from the provisions of the Banking Regulation Act 1949. For other entities, it derives power from the RBI act 1934. The objectives of this function are to protect the interest of the depositors and maintain the safety and soundness of the banking and Financial System of the country.
After the liberalization of the Indian Economy and Banking reforms in 1990s, the amplitude of the supervisory functions of RBI became has grown enormously. To keep up with the added importance of this function, the Board of Financial Supervision was constituted in 1994. Since then, BFS is working as the main guiding force behind RBI’s regulatory and supervisory initiatives.
Further, various departments have been created for effective supervisory functions. For example:
Department of Banking Operations and Development (DBOD) frames regulations for commercial banks.
Department of Banking Supervision (DBS) undertakes supervision of commercial banks, including the local area banks and all-India financial institutions.
Department of Non-Banking Supervision (DNBS) regulates and supervises the Non-Banking Financial Companies (NBFCs)
Urban Banks Department (UBD) regulates and supervises the Urban Cooperative Banks (UCBs).
Regulation of Regional Rural Banks (RRBs) and the Rural Cooperative Banks is done by Rural Planning and Credit Department (RPCD); while the supervision of these comes under NABARD.
RBI derives its regulating powers for Indian Banking System from the provisions of the Banking Regulation Act 1949. For other entities, it derives power from the RBI act 1934. The objectives of this function are to protect the interest of the depositors and maintain the safety and soundness of the banking and Financial System of the country.
After the liberalization of the Indian Economy and Banking reforms in 1990s, the amplitude of the supervisory functions of RBI became has grown enormously. To keep up with the added importance of this function, the Board of Financial Supervision was constituted in 1994. Since then, BFS is working as the main guiding force behind RBI’s regulatory and supervisory initiatives.
Further, various departments have been created for effective supervisory functions. For example:
Department of Banking Operations and Development (DBOD) frames regulations for commercial banks.
Department of Banking Supervision (DBS) undertakes supervision of commercial banks, including the local area banks and all-India financial institutions.
Department of Non-Banking Supervision (DNBS) regulates and supervises the Non-Banking Financial Companies (NBFCs)
Urban Banks Department (UBD) regulates and supervises the Urban Cooperative Banks (UCBs).
Regulation of Regional Rural Banks (RRBs) and the Rural Cooperative Banks is done by Rural Planning and Credit Department (RPCD); while the supervision of these comes under NABARD.
Similar questions