Question

Steps taken by rbi to promote the bill market in india

Answer 1

The Reserve Bank of Indian has taken various measures to improve the existing defects and to develop a sound money market in the country. Important among them are:

(i) Through the introduction of two schemes, one in 1952 and the other in 1970, the Reserve Bank has been making efforts to develop a sound bill market and to encourage the use of bills in the banking system. The variety of bills eligible for use has also been enlarged.

(ii) A number of measures have been taken to improve the functioning of the indigenous banks. These measures include: (a) their registration: (b) keeping and auditing of accounts; (e) providing financial accommodation through banks; etc.

(iii) The reserve bank is fully effective in the organised sector of the money market and has evolved procedures and conventions to integrate and coordinate the different components of money market.

Answer 2

The traditional bill market design of the RBI inaugurated in January 1952 was a discontented failure. Accordingly, the RBI launched a new bill market project in November 1970 to receive a certain bill market in India. It has been transformed in various occasion.

(i) The bills incorporated under the system must be accurate business bills, i.e. bills which reflects the sale and/or despatch of assets.

(ii) The RBI re-discounts these proposals. Due to which these bills designated as ‘Bills Rediscounting Scheme’.