Money is that commodity which is by together with large acceptable (legally) every bit a me-ans of payment inward the village of all transaction including debt. Money performs next functions.
- Medium of exchange
- Unit of account
- Standard of deferred payment
- Store of value
- Basis of credit creation
- Basis of distribution of national income, etc.
- Indian currency is too known every bit Fiat Money i.e. Money on the Fiat (order) of the government. It is too Known every bit Legal Tender Money.
- Reserve Bank of Republic of Republic of India manages the currency of Republic of Republic of India piece the responsibleness of coinage vests amongst Government of India.
- Presently Indian currency arrangement is based on the “Minimum Reserve System”.
- This agency if RBI is willing to impress additional currency, than later on from considering technical front, it has to decease on alone a mini-mum total of reserve which volition allow it to impress every bit much currency every bit it willing to print.
Gresham’s Law : Bad money (wornout notes together with currencies) drives practiced money out of the market.
New Monetary Aggregates
It was suggested yesteryear the working grouping constituted inward Dec 1997 nether the Chairmanship of Dr.Y.V.Reddy inward 1998.
M1= Currency inward circulation + demand deposits amongst banks + other deposits amongst RBI
Note : RBI has 2 types of deposits. One is the deposits of the commercial banks together with other is the deposit of surely individuals such every bit Ex. Governors of RBI who are permitted to occupation RBI similar whatever commercial bank. President of Republic of Republic of India tin too opened upwardly an concern human relationship amongst RBI.
M2 = Ml + Time liabilities part of saving deposit amongst banks + certificate of deposits issued yesteryear banks + term deposits amongst banks maturing inside ane year.
M3 = M2+ term deposits amongst banks over ane yr maturity + call/term borrowing of banks.
M4 = Abolished
M0 = Currency inward circulation + other deposits amongst RBI + Cash reserves of banking corporation amongst the banking corporation itself together with amongst the RBI.
- The commencement commercial banking corporation was established inward 1770 yesteryear the Alexander & Company, named Bank of Hindustan.
- The Bank of Bengal was established inward 1806 at Calcutta. The Bank of Bombay was established inward 1840 at Bombay together with Bank of Madras inward 1843 at Madras.
- These Three Presidency banks were amalgamated on 27 Jan 1921 together with Imperial Bank of Republic of Republic of India was established.
- On July 1, 1955 the violet Bank of Republic of Republic of India was partially nationalized together with it named State Bank of India.
- In 2006 State Bank of Republic of Republic of India celebrated its 200th yr of institution every bit the founder banking corporation was established inward 1806.
- At acquaint State Bank of Republic of Republic of India is the largest commercial banking corporation of India.
- Punjab National banking corporation was established inward 1894 together with it is known every bit the commencement really Indian banking corporation every bit it was established yesteryear Indians only.
- Banks inward Republic of Republic of India tin move classified into :
- Public Sector Banks
- Private Sector Banks
- Co-operative Banks
- Regional Rural Banks
- Foreign Banks
Reserve Bank of Republic of Republic of India
- The Reserve Bank of Republic of Republic of India was established on Apr 1, 1935 nether the Reserve Bank of Republic of Republic of India Act, 1934.
- RBI was established amongst v Crore every bit its working capital missive of the alphabet on the reason of the recommendations of the Hilton Young Commission.
- RBI was nationalized on Jan 1, 1949.
- The Central business office of the Reserve Bank of Republic of Republic of India was initially established inward Kolkata but was permanently moved to Bombay inward 1937.
- The full general superintendence together with direction of the RBI is entrusted amongst the 20-member-strong Central Board of Directors including the Governor iv Deputy Governors.
- The commencement Indian Governor of RBI was C.D. Deshmukh.