Aadhaar payment app for merchants.

Aadhaar payment app:Debit/Credit card payments and PoS machines will start disappearing from retail outlets in India soon.On 25th December GoI(Governemnt of India) anounced launch of AEPS (Aadhaar Enabled Payment System) app.After the demonetization Modi goverment is pacing up the process of cashless payment systems.Introduction of this governemnt controlled AEPS (Aadhaar Enabled Payment System) app would silence the critics of BJP governments' vision of cashless economy since no private 'digital wallet' players like 'paytm' ,'jiomoney' etc.. are involved in this venture.

Aadhaar Pay, launched by the government , has been developed by IDFC Bank in association with Unique Identification Authority of India (UIDAI) and the National Payments Corporation of India (NPCI), the bank said in a statement. IDFC Aadhaar Pay will enable millions of merchants across the country to facilitate cashless purchases for customers in a cost-effective and scalable way.

"This app can be used by a person to make payments without any phone. Almost 40 crore Aadhaar numbers already stand linked to bank accounts – that is half the adults in India. The aim is to link all Aadhaar numbers with bank accounts by March, 2017".Ajay Bhushan Pandey, CEO, Unique Identification Authority of India (UIDAI)

"The settlement is done through the Aadhaar bridge, which means it connects a much wider set of people. Anybody who has Aadhaar seeding done can make payments to merchants with this app. It wouldn’t matter if the person does not have a credit or debit card, or even a mobile phone."
Rajiv Lall, MD & CEO at IDFC Bank

How to use Aadhaar Payment App

Pre-requisites for using Aadhaar pay (Aadhaar Payment App)

1. To pay using aadhaar payment app, merchant needs a smartphone connected to a biometric scanner or an inbuilt finger print scanner.
2. The bank accounts of both merchant and the customer need to be linked with aadhaar to make aadhaar enabled payments.

Here is the step wise procedure for using Aadhaar Payment App.

• Merchants need to download and install the Aadhaar cashless merchant app on their smartphones (android users can download from playstore and iOS users can download it from iTunes)
• Connect a biometric reader(finger print scanner) to the phone
• Enter the details of Merchant's Aadhaar linked bank account information and register.
• To accept payment from a customer, enter the Aadhaar number of customer.
• Enter Customer’s bank name and amount to be paid.
• Validate the transaction using customer’s fingerprint.
• After successful authorisation, the amount will be transferred from customer’s bank account to merchant’s bank account.

Aadhar Pay – Aadhar Payment App

Aadhar Pay payment app has been developed by the IDFC Bank along with UIDAI and National Payments Corporation of India. The app launched on the national level on Sunday, 25th December.

Advantages of Aadhar Pay Application

1. The Main Benefits of Aadhar Payment Application are as Follows.
2. No PIN or OTP (One time Password) is Required to Transfer Money.
3. No need to Carry any type of Plastic Card(credit/debit).
4. No Payment Charges.

simon     21:25:00     No comments:

MODES OF ELECTRONIC FUND TRANSFERS (NEFT,RTGS and IMPS )

Inter-Bank Transfer enables electronic transfer of funds from the account of the remitter in one Bank to the account of the beneficiary maintained with any other Bank branch. There are three systems of Inter Bank Transfer – RTGS,NEFT and IMPS. Both these systems are maintained by Reserve Bank of India.

NEFT- National Electronic Fund Transfer

The National Electronic Funds Transfer is a nation-wide money transfer system which allows customers with the facility to electronically transfer funds from their respective bank accounts to any other account of the same bank or of any other bank network.Funds transfer through NEFT requires a transferring bank and a destination bank. With the RBI organizing the records of all the bank branches at a centralized database, almost all the banks are enabled to carry out an NEFT transaction.Any sum of money can be transferred using the NEFT system.

This system of fund transfer operates on a Deferred Net Settlement basis. Fund transfer transactions are settled in batches as opposed to the continuous, individual settlement in RTGS. Presently, NEFT operates in hourly batches from 9 am to 7 pm on week days and Working Saturdays.

Neft Process Flow

1. Request for NEFT by Bank Customer / Any Person
2. Data Entry at the Sending Bank Branch
3. Processing / Data Upload at Sending NEFT Service Centre
4. Transmission / Submission of NEFT Message to the NEFT Clearing Centre
5. Processing and Transmission of NEFT Message to the Beneficiary Banks
6. Data Validation at the Receiving NEFT Service Centre
7. Payment to Beneficiary
8. Revocation of Payment Instruction
9. Acknowledgement / Positive Confirmation by the Beneficiary Bank and Return in Case of Non-Credit
10. Sender to be Advised in Case of Returns
11. Beneficiary to be Advised of the Receipt of Funds

If you like to know more about NEFT process visit official RBI website link given below.

• Details of NEFT -RBI

Processing Charges / Service Charges for NEFT

a) Inward transactions at destination bank branches (for credit to beneficiary accounts)

– Free, no charges to be levied from beneficiaries

b) Outward transactions at originating bank branches – charges applicable for the remitter

-  For transactions up to Rs 10,000: not exceeding Rs 2.50 (+ Service Tax)

- For transactions above Rs 10,000 up to Rs 1 lakh: not exceeding Rs 5 (+ Service Tax)

-  For transactions above Rs 1 lakh and up to Rs 2 lakhs: not exceeding Rs 15 (+ Service Tax)

-  For transactions above Rs 2 lakhs: not exceeding Rs 25 (+ Service Tax)

RTGS- Real Time Gross Settlement

Real Time Gross Settlement as the name suggests is a real time funds transfer system which facilitates you to transfer funds from one bank to another in real time or on a gross basis.This is a system where the processing of funds transfer instructions takes place at the time they are received (real time). Also the settlement of funds transfer instructions occurs individually on an instruction by instruction basis (gross settlement). RTGS is the fastest possible interbank money transfer facility available through secure banking channels in India. The minimum value that can be transferred using RTGS is Rs. 2 Lakhs and above. However there is no upper cap on the amount that can be transacted.

Processing Charges / Service Charges for RTGS transactions

With a view to rationalize the service charges levied by banks for offering funds transfer through RTGS system, a broad framework has been mandated as under: 

a) Inward transactions – Free, no charge to be levied.

b) Outward transactions – ` 2 lakh to ` 5 lakh - not exceeding ` 30.00 per transaction; Above ` 5 lakh – not exceeding ` 55.00 per transaction.

• Read more about RTGS fund transfer

IMPS-Immediate Payment Service 

The National Payments Corporation of India introduced a pilot mobile payment project also known as the Immediate Payment Service (IMPS). Immediate Payment Service (IMPS) is an instant interbank electronic fund transferservice available 24x7, throughout the year including Sundays and any bank holiday. Customers can transfer and receive funds via IMPS using their registered Mobile number and Mobile Money Identifier (MMID) or Account number and IFSC code.To be able to transfer money via IMPS route you must first register for the immediate payment services with your bank. On obtaining the Mobile Money Identifier (MMID) and MPIN from the bank you can login or make a request via SMS to transfer a certain amount to a beneficiary. Now bank branches are also directly providing IMPS fund transfers up to a maximum of Rs.50000.

Difference between NEFT,RTGS and IMPS

• There is no cap on the minimum value that can be transacted via NEFT. RTGS system however only process transactions of a value starting from Rs. 2 Lakhs and above as it caters to gross settlements.Upper cieling for IMPS is Rs.50000.
• While the NEFT system settles transactions in batches, RTGS option transfer funds in real time. Using NEFT if a transfer order is received after the defined cut-off time, the transaction will have to wait until the next clearance to be fulfilled whereas RTGS transactions are processed continuously throughout the RTGS business hours.
• IMPS stands out as the most convenient and instant mode of money transfer, allowing transfer of money across various accounts and banks on the go using a mobile device.

Charges for IMPS

For transactions up to Rs 10,000: not exceeding Rs 2.50 (+ Service Tax)

- For transactions above Rs 10,000 up to Rs 1 lakh: not exceeding Rs 5 (+ Service Tax)

- For transactions above Rs 1 lakh and up to Rs 2 lakhs: not exceeding Rs 15 (+ Service Tax)

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simon     23:17:00     1 comment:

KYC Know Your Customer , AML Anti Money Laundering,CFT Combating of Financial Terrorism policy guidelines by RBI

The objective of KYC/AML/CFT guidelines is to prevent banks/FIs from being used, intentionally or unintentionally, by criminal elements for money laundering or terrorist financing activities. KYC procedures also enable banks/FIs to know/understand their customers and their financial dealings better and manage their risks prudently. 

KYC Policy -Know Your Customer Policy Guidelines issued by RBI

Banks/FIs should frame their KYC policies incorporating the following four key elements: 

1. Customer Acceptance Policy (CAP); 

2.Customer Identification Procedures (CIP); 

3.Monitoring of Transactions; and 

4.Risk Management 

1.Customer Acceptance Policy (CAP)

Banks/FIs should develop clear customer acceptance policies and procedures, including a description of the types of customers that are likely to pose a higher than average risk to the bank/FIs and including the following aspects of customer relationship in the bank/FIs. 

(i) No account is opened in anonymous or fictitious/benami name. 

(ii) Parameters of risk perception are clearly defined in terms of the nature of business activity, location of the customer and his clients, mode of payments, volume of turnover, social and financial status, etc. so as to enable the bank/FIs in categorizing the customers into low, medium and high risk ones. 

(iii) Documents and other information to be collected from different categories of customers depending on perceived risk and the requirements of PML Act, 2002 and instructions/guidelines issued by Reserve Bank from time to time. 

(iv) Not to open an account where the bank/FI is unable to apply appropriate customer due diligence measures, i.e., the bank/FI is unable to verify the identity and /or obtain required documents either due to non-cooperation of the customer or non-reliability of the documents/information furnished by the customer. 

(v) Circumstances, in which a customer is permitted to act on behalf of another person/entity, should be clearly spelt out in conformity with the established law and practice of banking. 

(vi) The bank/FI should have suitable systems in place to ensure that the identity of the customer does not match with any person or entity, whose name appears in the sanction lists circulated by the Reserve Bank. 

2. Customer Identification Procedure (CIP)

Customer identification means undertaking client due diligence measures while commencing an account-based relationship including identifying and verifying the customer and the beneficial owner on the basis of one of the OVDs. Banks/FIs need to obtain sufficient information to establish, to their satisfaction, the identity of each new customer, whether regular or occasional, and the purpose of the intended nature of the banking relationship.

“Officially valid document” (OVD):OVD means the passport, the driving licence, the Permanent Account Number (PAN) Card, the Voter's Identity Card issued by the Election Commission of India, job card issued by NREGA duly signed by an officer of the State Government, letter issued by the Unique Identification Authority of India containing details of name, address and Aadhaar number, or any other document as notified by the Central Government in consultation with the Regulator. 

Simplified Measures for Proof of Address:

The additional documents mentioned above shall be deemed to be OVDs under ‘simplified measure’ for the ‘low risk’ customers for the limited purpose of proof of address where customers are unable to produce any OVD for the same. (vi) Small Accounts If an individual customer does not possess either any of the OVDs or the documents applicable in respect of simplified procedure above, then ‘Small Accounts’ may be opened for such an individual. A ‘Small Account' means a savings account in which: 

•  the aggregate of all credits in a financial year does not exceed rupees one lakh; 
•  the aggregate of all withdrawals and transfers in a month does not exceed rupees ten thousand and 
•  the balance at any point of time does not exceed rupees fifty thousand. 

A ‘small account’ maybe opened on the basis of a self-attested photograph and affixation of signature or thumb print. 

3.Monitoring of Transactions

Ongoing monitoring :Ongoing monitoring is an essential element of effective KYC/AML procedures. Banks/FIs should exercise ongoing due diligence with respect to every customer and closely examine the transactions to ensure that they are consistent with the customer’s profile and source of funds as per extant instructions. High risk accounts have to be subjected to more intensified monitoring. 

4.Risk Management

Banks/FIs should exercise on going due diligence with respect to the business relationship with every client and closely examine the transactions in order to ensure that they are consistent with their knowledge about the clients, their business and risk profile and where necessary, the source of funds. The Board of Directors should ensure that an effective AML/CFT programme is in place by establishing appropriate procedures and ensuring their effective implementation. It should cover proper management oversight, systems and controls, segregation of duties, training of staff and other related matters 

This article is prepared based on the RBI’s Master Circular on Know Your Customer (KYC) norms/Anti-Money Laundering (AML)standards/Combating Financing of Terrorism (CFT)/Obligation of banks and financial institutions under Prevention of Money Laundering Act, (PMLA), 2002.Here is the official link. 

RBI NOtification on KYC/AML/CFT

For detailed reading you can download PDF version of the RBI’s Master Circular on Know Your Customer (KYC) norms available on the Indian Institute of Banking and Finance’ official website. 

http://iibf.org.in/documents/kyc-aml-cft-pmla.pdf

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simon     21:35:00     No comments:

MCLR -Marginal Cost of funds based Lending rate(New lending rate calculation proposed by RBI)

The Reserve Bank of India has issued new guidelines for setting lending rate (interest rate on loans) by commercial banks under the name Marginal Cost of Funds based Lending Rate. Till 31 March 2016, banks used the base rate as the benchmark rate to lend. The marginal cost of funds based lending rate (MCLR) refers to the minimum interest rate of a bank below which it cannot lend, except in some cases allowed by the RBI. MCLR actually describes the method by which the minimum interest rate for loans is determined by a bank.

Reasons for introduction of MCLR(Marginal Cost of funds based Lending rate) by RBI

You might have noticed that RBI has cut interest rates to the tune of 125 basis points in last fiscal year(2015-16). But, this has not been effectively transmitted to lending rates offered by the banks. Banks have so far lowered their base rate by only 50-60 basis points. Same is the case when interest rates are increased by the RBI. If RBI increases rates by say 100 basis points, banks increase their benchmark rates by say 50 basis points. Benefits of  Interest rate cut by RBI has not reached common people. So, as a result  the ‘base rate system’ has become an ineffective method to determine lending rates.  

Prior to MCLR system, different banks were following different methodology for calculation of base rate /minimum rate – that is either on the basis of average cost of funds or marginal cost of funds or blended cost of funds. 

Calculation of base rate

Before going deep into the MCLR lets understand how ‘base rate is calculated’ so far.

The main components of base rate system are;

1. Cost of funds -interest rates offered by banks on deposits)
2. Operating expenses to run the bank.
3. Minimum Rate of return ie margin or profit
4. Cost of maintaining CRR (Cash Reserve Ratio).

Note:RBI does not pay any interest rate on CRR. By including cost of  maintaining CRR in base rate calculation RBI is indirectly allowing banks to  recover cost of CRR from their customers .

As you can see ‘repo rate’ is not considered in base rate calculation.This was the main drawback of base rate system followed by banks.

Calculation of MCLR

As per RBI guidelines The MCLR shall comprise of:

1. Marginal cost of funds;
2. Negative carry on account of CRR;
3. Operating costs;
4. Tenor premium.

1.Marginal Cost of funds
The marginal cost of funds shall comprise of Marginal cost of borrowings and return on networth. 

Definition of marginal cost: The increase or decrease in costs as a result of one more or one less unit of output.

Instead of cost of funds(used in base rate system) banks have to consider changed cost or marginal cost in calculating MCLR.

Banks should consider following factors while calculating marginal cost of funds

• Interest rates offered on savings / current / term deposit accounts/ Foreign currency deposits
• Marginal cost of borrowings: short term borrowing rate which is repo rate and rate on long-term borrowing rates.
• Return on Net-worth

You can see Repo rate is also considered while calculating Marginal cost of borrowings. The marginal cost of borrowings shall have a weightage of 92% of Marginal Cost of Funds while return on networth will have the balance weightage of 8%. 

Detailed explanation of Marginal cost of fund is tabulated below.

2.Negative Carry on CRR

Negative carry on the mandatory CRR which arises due to return on CRR balances being nil, will be calculated as under:(As we have seen above in base rate calculation, no interest is paid on CRR).
Negative Carry on CRR=Required CRR x (marginal cost) / (1- CRR).
The marginal cost of funds arrived at (1) above shall be used for arriving at negative carry on CRR.

3.Operating Costs
All operating costs associated with providing the loan product including cost of raising funds shall be included under this head. It shall be ensured that the costs of providing those services which are separately recovered by way of service charges do not form part of this component.

4.Tenor premium
These costs arise from loan commitments with longer tenor. The change in tenor premium should not be borrower specific or loan class specific. In other words, the tenor premium will be uniform for all types of loans for a given residual tenor.

Marginal Cost of funds calculation in details

Sl	Source of funds (excluding equity)	Rates offered on deposits on the date of review/ rates at which funds raised (1)	Balance outstanding as a percentage of total funds (other than equity) (2) (See note below)	Marginal cost (1) x (2)	Remarks
A	Marginal Cost of Borrowings
1	Deposits
a	Current Deposits				The core portion of current deposits identified based on the guidelines on Asset Liability Management issued vide circular dated October 24, 2007 should be reckoned for arriving at the balance outstanding.
b	Savings Deposits				The core portion of savings deposits identified based on the guidelines on Asset Liability Management issued vide circular dated October 24, 2007 should be reckoned for arriving at the balance outstanding.
c	Term deposits (Fixed Rate)				Term deposits of various maturities including those on which differential interest rates are payable should be included.
d	Term deposits (Floating Rate)				The rate should be arrived at based on the prevailing external benchmark rate on the date of review.
e	Foreign currency deposits				Foreign currency deposits, to the extent deployed for lending in rupees, should be included in computing marginal cost of funds. The swap cost and hedge cost of such deposits should be reckoned for computing marginal cost.
2	Borrowings
a	Short term Rupee Borrowings				Interest payable on each type of short term borrowing will be arrived at using the average rates at which such short term borrowings were raised in the last one month. For eg. Interest on borrowings from RBI under LAF will be the average interest rate at which a bank has borrowed from RBI under LAF during the last one month.
b	Long term Rupee Borrowings				Option 1: Interest payable on each type of long term borrowing will be arrived at using the average rates at which such long term borrowings were raised. Option 2: The appropriate benchmark yield for bank bonds published by FIMMDA for valuation purposes will be used as the proxy rate for calculating marginal cost.
c	Foreign Currency Borrowings including HO borrowings by foreign banks (other than those forming part of Tier-I capital)				Foreign currency borrowings, to the extent deployed for lending in rupees, should be included in computing marginal cost of funds. The all-in-cost of raising foreign currency borrowings including swap cost and hedge cost would be reckoned for computing marginal cost of funds.
	Marginal cost of borrowings				The marginal cost of borrowings shall have a weightage of 92% of Marginal Cost of Funds while return on networth will have the balance weightage of 8%.

B

Return on networth

Amount of common equity Tier 1 capital required to be maintained for Risk Weighted Assets as per extant capital adequacy norms shall be included for computing marginal cost of funds. Since currently, the common equity Tier 1 capital is (5.5% +2.5%) 8% of RWA, the weightage given for this component in the marginal cost of funds will be 8%. In case of newly set up banks (either domestic or foreign banks operating as branches in India) where lending operations are mainly financed by capital, the weightage for this component may be higher ie in proportion to the extent of capital deployed for lending. This dispensation will be available for a period of three years from the date of commencing operations. The cost of equity will be the minimum desired rate of return on equity computed as a mark-up over the risk free rate. Banks could follow any pricing model such as Capital Asset Pricing Model (CAPM) to arrive at the cost of capital. This rate can be reviewed annually.

Marginal cost of funds = 92% x Marginal cost of borrowings + 8% x Return on networth

Calculation of actual lending rate

According to the RBI guideline, actual lending rates will be determined by adding the components of spread to the MCLR. Spread means that banks can charge higher interest rate depending upon the riskiness of the borrower.

Difference between MCLR and Base Rate

As we have seen already the base rate or the standard lending rate by a bank is calculated on the basis of the following factors:

1. Cost of funds -interest rates offered by banks on deposits)
2. Operating expenses to run the bank.
3. Minimum Rate of return ie margin or profit
4. Cost of maintaining CRR (Cash Reserve Ratio).

On the other hand, the MCLR is comprised of the following are the main components.

1. Marginal cost of funds;
2. Negative carry on account of CRR;
3. Operating costs;
4. Tenor premium.

CRR costs and operating expenses are the common factors for both base rate and the MCLR. The factor minimum rate of return is explicitly excluded under MCLR. But the most important difference is the careful calculation of Marginal costs under MCLR. On the other hand under base rate, the cost is calculated on an average basis by simply averaging the interest rate incurred for deposits. The requirement that MCLR should be revised monthly makes the MCLR very dynamic compared to the base rate.

Transition to MCLR from Base Rate/ BPLR

According to RBI

(a) Banks shall continue to review and publish Base Rate as hitherto.
(b) Existing loans and credit limits linked to the Base Rate/ BPLR shall continue till repayment or renewal, as the case may be.

Provided that existing borrowers shall have the option to move to the Marginal Cost of Funds based Lending Rate (MCLR) linked loan at mutually acceptable terms.

This article is prepared based on the information available on official site of RBI.Here you can read it in details Master Direction - Reserve Bank of India (Interest Rate on Advances) Directions, 2016

Hope you will find this article on MCLR -Marginal Cost fund based Lending rate useful in your exam preparation.Don't forget to share this with your friends.Like our facebook page to get more useful contents like this.

simon     14:53:00     No comments:

Categorisation of banks according to structure of banking system in India

In India Reserve Bank of India is the apex authority of all banks.All banks comes under reserve bank of India.

 

Scheduled and Non-Scheduled banks

A bank is said to be scheduled bank when it has paid up capital and reserves as per the prescription of RBI and included in the second schedule of RBI Act 1934.Non-scheduled banks are those commercial banks, which are not included in the second schedule of RBI Act 1934

Commercial Banks

Commercial bank is an institution that accept deposit from public, lend loans and advances to general publics and business men inorder to make profit.They cater to the financial requirement of industries and various sectors like agriculture,rural development, etc. Commercial banks includes public sector,private sector,foreign banks and regional rural banks.

Public sector Banks

It includes SBI,7 SBI associate banks and 19 nationalized banks.The public sector banks covers 90% of total banking business in India.

Private sector banks

Private sector banks are those whose equity is held by private share holders.Major private sector in India are ICICI,HDFC,AXIS,South Indian Bank,Yes Bank etc.

Foreign Banks

Those banks,which have their head office abroad.CITI Bank,HSBC,Stantard Chartered Bank etc. are examples of foreign banks in India.

Regional Rural Banks

These are state sponsored regional rural oriented banks.They provide credit for agriculture and rural development.Their borrowers include small and marginal farmers,agricultural labourers,artisans etc.NABARD hold the apex position in the agriculture and rural development.

Co-operative Banks

Co-operative banks was set up by passing Co-operatice Credit  Societies Act in 1904.They are managed and organized based on the principal of co-operation mutual help. The main objective of these banks is rural credit.

Three tier structure exist in Co-operative bank structure.

1. State co-operative bank at the apex level
2. Central co-operative bank at district level
3. Primary co-operative at the base or local level

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simon     23:13:00     No comments:

RBI(Reserve bank of India) and it's functions

RBI was established in 1935 during the British rule , to function as the central bank of the country. The RBI act 1934 confers upon it the power to act as note issuing authority, banker’s bank and banker to the government. Though privately owned initially, in 1949 it was nationalized and since then fully owned by Government of India (GoI). Its affairs are governed by the Central Board of Directors appointed by the Government of India .The preamble of the Reserve Bank of India describes it main functions 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.

Functions of RBI

1.RBI as bankers bank

Scheduled banks, appearing in the second schedule of RBI Act1934, can avail facilities of refinance from from RBI subject to their fulfilling certain obligations as laid down in the said act.Relation between RBI and banks is very close and of varied nature ,as detaied below:

a.As supervisory and controlling authority over banks-like, licencing ,permission of opening branches,inspection of banks,control over top management of bank.
b.As controller of credit- RBI controls controls the credit flow by fixing SLR,CRR and interest rate.
c.As banker to banks-as a lender of last result and grants accommodation to scheduled banks in the form of re-discounting or purchase of eligible bills,loans and advances against certain securities.Also ,liquidity adjustment facility was introduced by RBI in the year 2000 the fund of which are being used by the banks for their day-to-day mismatches in their liquidity.Under this scheme Reverse Repo auctions(for absorption of liquidity) and Repo auction (for injection of liquidity) are conducted on a daily basis.
d.RBI is empowered to collect credit information from banking companies and to furnish such information in a consolidated form to any banking company applying for the same.

2. Banker to Government

The Reserve Bank of India accepts and makes payment on behalf of Central Government. It carries out its exchange, remittance, management of public debt and other banking function of the Central Government. The Central Government entrusts its money, remittance, exchange and banking transactions in India with the Reserve Bank of India.

3.Issuer of Currency

Reserve bank of India is the sole body who is authorized to issue currency in India.Coins are minted by Government of India.The RBI works as an agent of government for distributing and handling of coins. RBI is also responsible for preventing counterfeiting of currency. The RBI is authorized to issue notes up to value of Rupees ten thousand.

4.Monetary Authority

Monetary authority or monetary policy refers to the use of instruments under RBI control to regulate availability, cost and use of money and credit and providing the citizens the appropriate available monetary facilities. Central bank does this to maintain pricing stability, low & stable inflation as well as promoting economic growth of country.

4. Regulation and Management of Foreign Exchange

The Reserve Bank of India is empowered to regulate, prohibit, and restrict dealing in foreign exchange. It issues license to banks and other institution to act as the authorized agency in the foreign exchange market. The RBI’s Financial Markets Department (FMD) participates in the foreign exchange market by undertaking sales / purchases of foreign currency to ease volatility in periods of excess demand for/supply of foreign currency.

5.Depositor Awareness and Education

The Reserve Bank of India has constituted a fund called “Depositor Education and Awareness Fund.” The fund is utilized for the promotion of depositors’ interest and other purposes in the interest of the depositor.

6.Regulator and Supervisor of the Payment and Settlement Systems

Payment and settlement systems play an important role in improving overall economic efficiency. The Payment and Settlement Systems Act of 2007 (PSS Act) gives the Reserve Bank oversight authority, including regulation and supervision, for the payment and settlement systems in the country. In this role, the RBI focuses on the development and functioning of safe, secure and efficient payment and settlement mechanisms. 

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simon     22:39:00     No comments: