Economy; LIC, GIC, Reforms and RBI

  • Life insurance corporation (LIC) –
    • Established on 1st September 1956.
    • Head office is at Mumbai.
    • Zonal offices.
      • Mumbai.
      • Kolkata.
      • Delhi.
      • Chennai.
      • Kanpur.
      • Hyderabad.
      • And Bhopal.
  • General insurance corporation (GIC) –
    • Established on 1st Jan 1973.
    • It has four subsidiary companies.
      • National insurance company limited, Kolkata.
      • The new India assurance company limited, Mumbai.
      • The oriental and insurance company limited, New Delhi.
      • United India fire and general insurance company limited, Chennai.
  • Reforms in insurance sector –
    • In 1993, Malhotra committee was set up to recommend reforms in the insurance sector.
    • Later reforms started with the enactment of insurance regulatory and development authority act 1999.
    • The act paved the way for the entry of private insurance companies into the insurance market and also constitution of insurance regulatory company limited and development authority.
  • Insurance regulatory and development authority (IRDA) –
    • Constituted on 19th April 2000.
    • Was constituted to protect the interest of insurance policies and to regulate, promote, and ensure orderly growth of the insurance industry.
    • Consist of a chairperson, 3 whole time members and four part time members.
    • For regulating the insurance sector it has been issuing regulations regulations covering almost the entire segment of insurance industry.
  • Scheduled banks –
    • Are entered in the second schedule of the RBI act, 1934.
    • Have paid up capital and reserves of an aggregate value of not less than 5 lakh.
    • Satisfies RBI that their affairs are carried out in the interest of their depositors.
    • All commercial banks (Indian and foreign), regional rural banks and state cooperative banks are scheduled banks.
  • Non scheduled banks are not included in the second scheduled of the RBI act, 1934.
  • Reserve bank of India (RBI) –
    • Is the central bank of the country.
    • Was setup on the basis of Hilton young commission recommendation in April 1935, with the attachment of RBI Act, 1934.
    • First governor was Sir Osborne smith.
    • Main purpose of the existence of RBI was to separate currency and credit from RBI.
    • It was nationalized in 1949.
    • First Indian governor was C D Deshmukh.
    • Headquarter is in Mumbai.
    • There are 14 directors in the central board of directors besides the governor, four deputy governors and one government official.
  • Functions of the RBI –
    • Issues currency except coins which are minted by the government.
    • It has the monetary authority.
    • Acts as the banker and debt manager to the central government.
    • Acts as banker of banks.
    • Regulator of banking system.
    • Manager of foreign exchange.
    • Maintains financial stability.
    • Acts as the regulator and supervisor of the payment and settlement system.
    • Since 1952, monetary policy of the RBI emphasis on twin goals. These are as follows –
      • Economic growth.
      • Inflation control.
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