Foreign exchange is managed and controlled in order to overcome the deficit in balance of payments. Apart from all scheduled commercial banks and selected urban co-operative banks, 21 other financial institutions like LIC, UTI, GIC, NABARD, all development banks; all mutual funds, etc., are included in the scheme. The RBI also provides liquidity support to them in the form of reverse Repos in Government dated securities and 91-Day Treasury Bills. (ii) All India Rural Credit Survey Committee: The RBI appointed an All India Rural Credit Survey Committee in 1951 which submitted its report in 1954. Besides, it brings out Occasional Papers by its experts, and conducts surveys and publishes reports on them. The RBI controls the money supply and credit to ensure price stability and meet the varying economic conditions of the country. We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. Its focus is on export of manufactured goods, project exports, exports of technology services, export of manufactured goods and export of computer software. Banks were given freedom to fix margins on advances against sensitive commodities, except unreleased stocks of sugar for which 15 per cent margin had been fixed. It has been due to the efforts of the RBI that the co-operative movement has been placed on a sound footing. Before publishing your articles on this site, please read the following pages: 1. In September 1990, the RBI rationalised the lending rate structure of commercial banks. Consequently, it has not been able to free the ruralites from the hold of the indigenous bankers and money­lenders. Interest for the month is calculated on the minimum balance between the 10th day and the last day of the month. Its paid-up capital of Rs.250 crores is fully subscribed by the RBI. In fact, its credit squeeze policy has encouraged black money because traders and businessmen are able to get credit from the black money. When in early 1992, the inflation rate started declining, the banks were advised to support the revival of productive activity. It is thus one of the prime movers in the development process. In this liquidity ratio are included excess reserves, current account balances of the commercial banks with the RBI and other banks, gold and unencumbered approved securities. 9. This report will help you to learn about:- 1. The Bank has failed to develop Indian exchange banks with the result that foreign banks operating in the country continue to pocket a major portion of the foreign exchange business. The process of liberalisation towards current account convertibility has been continued by delegating more powers to ADs. the commercial banks, the co-operative banks, the RRBs, and NABARD), it has been successful in providing credit for the development of agriculture, trade, commerce, industry, and other productive activities in the rural areas. To control inflation and tackle the problem of excess liquidity due to foreign exchange inflows, the RBI sells Government securities. The RBI determines the external value of the rupee in relation to the weighted basket of India’s major trading partners with pound-sterling as the intervention currency. (i) RBI Assistance to Financial Institutions: To provide credit facilities to industries, the RBI has helped in the establishment of the following financial institutions: (1) Industrial Finance Corporation of India (IFCI): The IFCI was set up in 1948 by the RBI with the objective of providing medium and long-term financial assistance to the industrial sector. They have been instrumental in channelising the flow of credit from speculative and other undesirable purposes to socially desirable and economically useful purposes. The CMA has made possible prompt and easy availability of credit to large industries with post- sanction by the RBI. During 1992-93, the RBI sanctioned a special refinance facility of Rs.400 crores to IDBI. The State Bank of India and a few public sector banks which deal in foreign exchange business and have their offices in foreign countries have not been able to achieve much in this direction because of the lack of clear policy guidelines by the RBI. It has successfully floated loans on behalf of the Central and State Governments at low interest rates. (iv) Credit Monitoring Arrangement (CMA): The RBI introduced the CMA in place of the Credit Authorisation Scheme (CAS) in October 1988 whereby it delegated authority to banks to sanction credit proposals of large borrowers and thereafter submit the same for post-sanction scrutiny to the RBI. It has been providing concessional credit, refinance facilities, and guarantee to commercial banks for exporters. (b) It can borrow money from a scheduled bank in India or from central banks in other countries. 1. 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