2. MONETARY POLICY
• Monetary policy is that policy which is used
by central bank to control the money supply
in the economy in order to achieve the
desirable growth.
3. OBJECTIVES
1. To control the supply of money.
2. To control the cost of money and credit.
3. Exchange stability.
6. QUANTITATIVE MEASURE
• Quantitative measures or traditional
measures of monetary control are
following:
1. OPEN MARKET OPERATIONS.
2. DISCOUNT RATE OR BANK RATE.
3. CASH RESERVE RATIO.
7. OPEN MARKET OPERATION
•The open market operation
comprises sale and purchases of
government securities and
treasury bills by the central bank
of the country.
8. BANK RATE
• Bank Rate refers to the official interest rate
at which RBI will provide loans to the
banking system which includes commercial
/ cooperative banks, development banks
etc. Such loans are given out either by
direct lending or by rediscounting (buying
back) the bills of commercial banks and
treasury bills. Thus, bank rate is also known
as discount rate.
• Bank rate is 6.75%.
9. CASH RESERVE RATIO
•The cash reserve ratio is the
percentage of total deposits
which commercial banks are
required to maintain in the form
of cash reserve with the central
bank.
•Cash reserve ratio is 4.00%.
11. REPO RATE
•Repo rate is that rate at which
RBI lends money to the
commercial bank for short term.
•Repo rate is 6.25%.
•It is less than 90 days.
12. REVERSE REPO RATE
•Reverse repo rate is that rate of
interest at which RBI borrow
money from commercial bank for
short term.
•Reverse repo rate is 5.75%.
•It is also less than 90 days.
13. STATUTORY LIQUIDITY RATIO
• It is that ratio of total deposit of the
every bank which every bank have to
keep with itself in the form of assets
such as( Gold, Demand and Time,
Liabilities, Securities).
• SLR is 20.75%.
