Reserve Bank of India (RBI)

Established:

• Date: April 1, 1935
• Act: Reserve Bank of India Act, 1934
• Headquarters: Mumbai

Owner: Ministry of Finance, Government of India

Functions:

• Regulates the Indian banking system
• Manages the issuance and supply of Indian rupee
• Oversees payment systems
• Promotes economic development and financial stability

Key Responsibilities:

• Currency Management: Manages issuance and control of currency notes through Bharatiya Reserve Bank Note Mudran Ltd (BRBNM) in Mysore and Salboni.
• Payment Systems: Co-established the National Payments Corporation of India to regulate and promote payment and settlement systems.
• Deposit Insurance and Credit Guarantee: Through the Deposit Insurance and Credit Guarantee Corporation (DICGC), provides insurance for deposits and guarantees credit facilities to banks.

Governance:

• Central Board of Directors: Composed of 21 members:
  • Governor
  • Four Deputy Governors
  • Two representatives from the Finance Ministry
  • Ten government-nominated directors
  • Four directors representing local boards (Mumbai, Kolkata, Chennai, Delhi)
• Chairperson: District Magistrate/District Collector
• Members: Includes representatives from the lead bank of the district, NABARD, local co-operative banks, and commercial banks.

Preamble:

• Regulate the issuance of banknotes, maintain reserves for monetary stability, and operate the currency and credit system to benefit the country. Ensure price stability while supporting economic growth.

Structure:

• Central Board of Directors: Includes governor, deputy governors, regional directors, and other members.
• Executive Directors: M. Rajeshwar Rao, Lily Vadera, Rabi N. Mishra, Smt. Nanda S. Dave, Anil K. Sharma, S. C. Murmu, T. Rabi Sankar, Janak Raj, P. Vijayakumar, Indrani Banerjee, O.P. Mall, and Sudha Balakrishnan (Chief Financial Officer).

Current Governor: Shaktikanta Das

Special Divisions:

• BRBNM: Manages currency printing and minting.
• DICGC: Provides deposit insurance and credit guarantees.

Notable Initiatives:

• Monetary Policy Committee (MPC): Established in 2016 to handle monetary policy decisions.
• Virtual Currency Regulation: Approach to managing virtual currencies and addressing related legal challenges.

Role in Agricultural Credit:

Agricultural Credit Department (ACD):

• Establishment: Focuses on agricultural credit and support.

Key Committees and Funds:

1. All India Rural Credit Survey Committee (AIRCSC):
   • Chairman: Sri. Gorwala
   • Year: 1954
   • Recommendations: Led to the establishment of two funds to enhance rural credit.

1. National Agricultural Credit (Long-term Operations) Fund (1955):
   • Initial Capital: Rs. 10 crores
   • Annual Contribution: Initially Rs. 5 crores, later increased to Rs. 15 crores

1. National Agricultural Credit (Stabilization Fund) (1956):
   • Initial Contribution: Rs. 1 crore
   • Annual Contribution: Rs. 1 crore

National Bank for Agricultural and Rural Development (NABARD)

Origin of NABARD

• Background: Agricultural Refinance and Development Corporation (ARDC) had limited impact on direct financing and delivery of rural credit.
• Committees and Commissions:
  • Banking Commission (1972)
  • National Commission on Agriculture (NCA) (1976)
  • Committee to Review Arrangements for Institutional Credit in Agricultural and Rural Development (CRAFICARD) (1979): Recommended the creation of NABARD.
• Establishment: NABARD was founded on July 12, 1982.
• Merger: ARDC, Agricultural Credit Department (ACD), and Rural Planning and Credit Cell (RPCC) of RBI were merged into NABARD.

Structure

• Headquarters: Mumbai, India.
• Offices: 17 regional offices, 10 sub-offices, and 213 district offices.
• Board of Management:
  • Appointed By: Central Government in consultation with RBI.
  • Members: Includes Chairman, Managing Director (CEO), and 13 other directors with expertise in rural economics, cooperatives, commercial banks, and government officials.

Sources of Funds

• Authorized Share Capital: ₹500 crore (equally contributed by Government of India and RBI).
• Issued and Paid-Up Capital: ₹100 crore.
• Other Sources:
  • Borrowings from Government of India and approved institutions.
  • Borrowings from RBI.
  • Deposits from state governments and local authorities.
  • Gifts and grants.

Objectives

• Credit Needs Assessment: Survey and estimate credit requirements for agriculture and rural development.
• Refinance Promotion: Promote and integrate rural development activities through refinance.
• Direct Credit: Provide direct credit to institutions or individuals with government approval.
• Coordination: Maintain close links with RBI for financial guidance and assistance.
• Catalytic Role: Formulate rural development plans and policies.

Functions

a) Credit Activities

• Credit Plans: Prepare potential-linked credit plans for districts and participate in annual action plans.
• Refinance:
  • Short-Term: For agricultural production and marketing, up to 12 months.
  • Medium/Long-Term: For investments in agriculture and allied activities, up to 15 years.

• Refinance Extent:
  • 100% for pilot rainfed farming, wasteland development, non-farm sector schemes, etc.
  • 75% for agro-processing units, bio-gas schemes.
  • 70% for all other schemes including IRDP.
  • 50% for farm mechanization, rural electrification.
• Direct Finance: Provide direct finance to state governments and state-sponsored corporations.
• Monitoring and Consultancy: Ensure proper project implementation and undertake consultancy work.

b) Development Activities

• Institutional Development: Financial assistance for establishing financial agencies.
• Research and Development Fund: Support research and development.
• Agricultural and Rural Enterprises Incubation Fund (AREIF): Assist in new enterprise inception.
• Rural Promotion Corpus Fund (RPCF): Support training centers, entrepreneurship development, and technical monitoring.
• Credit and Financial Services Fund (CFSF): Assist innovations in rural banking and credit systems.
• Linking SHGs: Refinance banks 100% for loans to Self-Help Groups (SHGs).

c) Regulatory Activities

• Regulation: Shares regulatory functions with RBI for cooperative banks and regional rural banks (RRBs).
• Inspection: Inspects RRBs and cooperative banks.
• Branch Authorization: Provides recommendations for branch opening permissions.
• Assistance Authorization: Authorizes state and district central cooperative banks for assistance beyond cooperative sector.

World Bank (WB)

Overview

• Establishment: The World Bank was established in 1944 during the Bretton Woods Conference, alongside the International Monetary Fund (IMF).
• Headquarters: Washington, D.C., USA.
• Mission: To end extreme poverty and promote shared prosperity by supporting developing countries in their economic development and structural reforms.

Structure

• World Bank Group: Composed of five institutions:
  1. International Bank for Reconstruction and Development (IBRD): Provides loans and financial products to middle-income and creditworthy low-income countries.
  2. International Development Association (IDA): Provides concessional loans and grants to the world’s poorest countries.
  3. International Finance Corporation (IFC): Supports private sector development by providing investment and advisory services to businesses and industries.
  4. Multilateral Investment Guarantee Agency (MIGA): Provides political risk insurance and credit enhancement to encourage foreign investment in developing countries.
  5. International Centre for Settlement of Investment Disputes (ICSID): Facilitates the resolution of disputes between governments and foreign investors.

Funding and Financial Structure

• Capital Base: The World Bank’s financial resources come from capital contributions by member countries, as well as funds raised through issuing bonds in the international financial markets.
• Lending Instruments:
  • IBRD Loans: Market-based loans for middle-income and creditworthy low-income countries.
  • IDA Credits: Low or zero-interest loans and grants for the poorest countries.
  • Investment Projects: Funding for specific development projects across sectors.

Priority Areas

1. Poverty Reduction:

1. • Focus: Implementing projects and programs to improve living standards and economic opportunities for the poor.

2. Sustainable Development:

1. • Focus: Investing in environmental sustainability, climate change mitigation, and natural resource management.

3. Infrastructure Development:

1. • Focus: Supporting projects in transportation, energy, water, and sanitation to enhance economic growth and connectivity.

4. Human Development:

1. • Focus: Improving education, healthcare, and social services to enhance human capital.

5. Governance and Institutions:

1. • Focus: Strengthening institutions and governance structures to improve policy implementation and development outcomes.

Asian Development Bank (ADB)

• Establishment: Founded in 1966.
• Headquarters: Manila, Philippines.
• Mission: To promote economic and social development in the Asia-Pacific region by providing loans, technical assistance, and policy support.
• Membership: 67 members (48 from Asia-Pacific, 19 from other regions).
• Priority Areas: Infrastructure development, sustainable development, inclusive growth, and regional integration.

Asia Financial Corporation (AFC)

1. Overview:
   • A financial institution operating in the Asia region, involved in various financial services.
2. Type of Institution:
   • Likely a financial services provider focusing on banking, investment, or economic development.
3. Primary Functions:
   • Banking Services: Offers retail and corporate banking products.
   • Investment Services: Engages in investment banking, private equity, and capital management.
   • Development Finance: May finance infrastructure and economic development projects.
4. Regional Focus:
   • Targets financial services and investment opportunities in Asia.
5. Key Activities:
   • Project Financing: Provides capital for large-scale infrastructure and development projects.
   • Advisory Services: Offers financial and strategic advice to businesses and governments.
   • Capital Management: Manages investments and financial assets for clients.
6. Specialization:
   • Focuses on addressing the financial needs and opportunities within the Asian market.