The Strategic Aspirations of the Reserve Bank of India Essay

The Reserve Bank of India ( RBI ) is India’s cardinal bank or ‘the bank of the bankers’ . It was established on April 1. 1935 in conformity with the commissariats of the Reserve Bank of India Act. 1934. The Central Office of the RBI. ab initio set up at Kolkata. is at Mumbai. The RBI is to the full owned by the Government of India.

The history of the RBI is closely aligned with the economic and fiscal history of India. Most cen¬tral Bankss around the universe were established around the beginning of the 20th century. The Bank was established on the footing of the Hilton Young Commission. It began its operations by tak¬ing over from the Government the maps so far being performed by the Controller of Currency and from the Imperial Bank of India. the direction of Government histories and public debt. After inde¬pendence. RBI bit by bit strengthened its institu¬tion-building capablenesss and evolved in footings of maps from cardinal banking to that of develop¬ment. There have been several efforts at reor-ganisation. restructuring and creative activity of specialized establishments to provide to emerging demands.

The Preamble of the RBI describes its basic maps like this: ‘…to modulate the issue of Bank Notes and maintaining of militias with a position to secur¬ing pecuniary stableness in India and by and large to op-erate the currency and recognition system of the state to its advantage. ’ The vision states that the RBI ‘…aims to be a prima cardinal bank with believable. transparent. proactive and contemporary poli-cies and seeks to be a accelerator for the outgrowth of a globally competitory fiscal system that helps present a high quality of life to the people in the state. ’ The mission states that ‘RBI seeks to de¬velop a sound and efficient fiscal system with pecuniary stableness conducive to equilibrate and sus-tained growing of the Indian economy’ . The corporate values underscoring the mission statement include public involvement. unity. excellence. independency of positions and reactivity and dynamism.

The three countries in which aims of the RBI can be stated are as below. 1. Monetary policy aims such as incorporating rising prices and advancing economic growing. direction of foreign exchange militias and doing currency available. 2. Aims set for pull offing fiscal sector developments such as supervising of systems and information entree and helping banking and fiscal establishments to go competitory globally. 3. Organisational development aims such as development of economic research installations. making information system for back uping economic decision-making. fiscal direction and human resource direction. Strategic actions taken to gain the aims fall under four classs: 1. The thrust country of pecuniary policy preparation and pull offing fiscal sector ; 2. Evolving the legal model to back up the thrust country ;

2. Customer services for supplying support and creative activity of positive relationship ; and 3. Organizational support such as construction. systems. human resource development and acceptance of modern engineering. The major maps performed by the RBI are:

•Acting as the pecuniary authorization
•Acting as the regulator and supervisor of the fiscal system
•Discharging duties as the director of foreign exchange
•Issue currency
•Play a developmental function
•Related maps such as moving as the banker to the authorities and scheduled Bankss The direction of the RBI is the duty of the cardinal board of managers headed by the governor and consisting of deputy governors and other managers. all of whom are appointed by the authorities. There are four local boards based at Chennai. Kolkata. Mumbai and New Delhi. The daily direction of RBI is in the custodies of the executive managers. directors at assorted degrees and the support staff. There are about 22000 employees at RBI. working in 25 sections and preparation colleges.

The RBI identified its strengths and failings as under.

• Strengths A big organic structure of competent offers and staff ; entree to identify informations on the economic system ; broad organizational web with 22 regional offices ; established substructure ; ability to pull endowment ; and fiscal ego sufficiency. • Weaknesses Structural rigidness. deficiency of answerability and slow decision-making ; eroded specialist know-how ; strong employee brotherhoods with stiff industrial dealingss stance ; surplus staff ; and weak market intelligence. Over the old ages. the RBI has evolved in footings of construction and maps. in response to the function every bit signed to it. There have been sweeping alterations in the economic. societal and political environment.

The RBI has had to react to it even in the absence of a systematic strategic program. In 1992. the RBI. with the aid of a private consultancy house. embarked on a monolithic strategic planning exercising. The aim was to set up a roadmap to redefine RBI’s function and to reexamine internal organizational and managerial efficaciousness. turn to the altering outlooks from external stakeholders and repositing the bank in the planetary context. The strategic planning exercising was buttressed by departmental place documents and paperss on assorted topics such as engineering. human resources and environmental tendencies.

The strategic program of the RBI emerged with four subdivisions covering with the statement of mission. aims and policy. a reappraisal of RBI’s strengths and failings and strategic actions required with an execution program. The strategic program reiterates expectancy of germinating external environment in the medium-term ; revisiting strengths and failings ( rating of capablenesss ) ; and making off with the out-of-date authorizations for heightening efficiency in operations in promotion of best public involvements. The consequences of these attempts are likely to attest in achieving a seeable focal point. strengthened proficiency. realization of shared sense of intent. optimizing resource usage and build-up of impulse to accomplish ends.

Historically. the RBI adopted the tried technique of reacting to external environment in a matter-of-fact mode and doing bit-by-bit alterations. The quandary in acceptance of a comprehensive strategic program was the hazard of trading off the flexibleness of the matter-of-fact attack to making rigidness imposed by a set theoretical account of planning. 1. See the vision and mission statements of the Reserve Bank of India. Remark on the quality of both these statements. 2. Should the RBI go for a systematic and comprehensive strategic program in topographic point of its earlier matter-of-fact attack of reacting to environmental events as and when they occur? Why?


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