Government can control inflation rate by making changing in Monetry Policy. Majority of changes are done by the RBI. Inflation rate also control by fiscal policy.

1. Economics For Manager
Assignment Subject: Various Tool
of Reserve Bank of India (RBI) to
Control Inflation

2. ◈ Group Member:
⬥ Bhanderi Sumit
⬥ Goti Kishan
⬥ Asif Nareja
⬥ Nishad Mehta
⬥ Naitik Kasavala
Submitted To:
Dr. Lucky Mishra

3. MONITORY POLICY
• What Is Monetary Policy?
• Why Monetary Policy are Prepared?
• Who are the member and government body prepared Monetary
Policy?

4. VARIOUS TOOL OF MONETARY POLICY
1. Statutory Liquidity Ratio (SLR):
 SLR is ratio of Liquid Assets to Net demand and time Liabilities.
 Feature & Importance of SLR:
 Bank have to Maintain Cash, Gold, Government Securities in
proportion of their demand and time liabilities.
Mandatory Reserve Requirement
 Increasing Working efficiency of bank

5. STATUTORY LIQUIDITY RATIO (SLR):
 Assets Eligible Under SLR:
Cash, Gold, Approved Securities By RBI
Most Of Bank keep Central Government Bonds & Treasury Bill
NDTL (Net Demand Time Liability):
NDTL that is held by bank of

6. STATUTORY LIQUIDITY RATIO (SLR):
•Last 10 Year Data of SLR

7. 2. Bank Rate
•Bank Rate:
It is internal rate that Charged by country’s Central Bank
(RBI) on loan and advances to Control Money Supply In
economy.
When Bank Rate is increased by RBI, bank’s borrowing
costs increases which in return, reduces the supply of
money in the market.

8. 2. Bank Rate
• Last 10 Year Data of Bank Rate

9. 3. Cash Reserve Ratio (CRR)
• The percentage of cash required to be kept in reserves, visa-vis a
bank’s total deposits, is called the Cash Reserve Ratio.
• Scheduled commercial Banks(SCBS) in India are required to hold a
certain proportion of their Demand & Time Liabilities(DTL) with
RBI as per Section 42 (1) of the Reserve Bank of India Act, 1934
• This minimum ratio is stipulated by the RBI and is known as the
CRR or Cash Reserve Ratio.
• Is a tool used by RBI to control liquidity in the banking system.

10. 3. Cash Reserve Ratio (CRR)
•Objectives of Cash Reserve Ratio
• Since a part of the bank’s deposits is with the Reserve Bank of
India, it ensures the security of the amount. It makes it readily
available when customers want their deposits back.
• Also, CRR helps in keeping inflation under control. At the time
of high inflation in the economy, RBI increases the CRR, so that
banks need to keep more money in reserves so that they have
less money to lend further.

11. 3. Cash Reserve Ratio (CRR)
• Last 10 Year Data of CRR

12. 4. Repo Rate and reverse Repo rate
•Repo rate:
A rate which commercial bank borrow fund from RBI during
Short fall of fund
Current Repo rate is 4.0%
• How It used to control Inflation
RBI Action: Repo rate will be increased to discourage to
discourage commercial bank to borrow money from RBI
Result: Due to increase in RR Money supply Decreasing in
economy and it help to control inflation

13. 4. Repo Rate and reverse Repo rate
•Reverse Repo rate:
 A Rate at which Bank lend money to RBI For short term
Current Reverse Repo rate is 3.35%
•How it is used to control inflation
RBI Action: RBI will be Increased so commercial bank will
prefer to lend money to RBI
 Result: If Increase in RRR then Commercial bank put
money with RBI so less money rotated in economy

14. 4. Repo Rate and reverse Repo rate
• Last 10 Year Data of RRR

15. 5. Marginal Standing Facility
• The MSF was introduced by the RBI in its monetary policy for
2011-12 after successfully test firing it from December 2010
onwards.
• Banks can borrow from the RBI up to 1 % of their Net Demand
and Time Liabilities or liabilities (or deposits) under MSF
(increased to 2% later)
• Under MSF, a bank can borrow one-day loans form the RBI,
even if it doesn’t have any eligible securities excess of its SLR
requirement (maintains only the SLR)

16. 5. Marginal Standing Facility
• Last 10 Year Data of MSF

17. THANK YOU