WHAT IS MONETARY POLICY...?
Monetary policy refers to the use of instruments
under the control of the RBI to regulate the
availability, cost and use of money and credit.
The goal: achieving specific economic objectives, such
as low and stable inflation and promoting growth.
OJECTIVES OF MONETARY POLICY
BALANCED ECONOMIC GROWTH
MAINTAIN PRICE STABILITY
TO ACCLERATE THE PROCESS OF ECONOMIC
CONTROL THE SUPPLY OF MONEY
CREATION & EXPENSION OF FINANCIAL
Bank rate, also referred to as the discount rate is
the rate of interest which a central bank charges on
the loans and advances to a commercial bank. ...
Whenever a bank has a shortage of funds, they can
typically borrow from the central bank based on the
monetary policy of the country.
Definition: The Credit Rationing is a measure
undertaken by the central bank to limit or deny the
supply of credit based on the investor’s
creditworthiness and an increased loan demand.
Simply, the process in which the central bank requests
or persuade the commercial banks to comply with the
general monetary policy of the central bank is called a
Direct Action. Under the banking regulation Act,
the central bank has the authority to take
strict action against any of the commercial banks
that refuses to obey the directions given by Reserve
Bank of India. ..
Margin is the difference between market value of a
security and its maximum loan value.
Marginal requirements of loan can be increased or
decreased to control according to the census of
LIMITATIONS OF MONETARY
UNFAVOURABLE BANKING HABITS
UNDERDEVELOPED MONEY MARKET
EXISTENCE OF BLACK MONEY
LIMITED ROLE IN CONTROLLING PRICES