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Monetary policy of RBI

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Monetary policy of RBI a analysis.

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Monetary policy of RBI

  1. 1. Copyright © Wondershare Software Presented By : Chetan Jadav Rasik Jani
  2. 2. CD Deshmukh The First Indian Governor of Reserve Bank of India (RBI) Dr. Raghuram Rajan Present Governer of Reserve Bank of India (RBI)
  3. 3. Monetary policy- Meaning The part of the economic policy which regulates the level of money in the economy in order to achieve certain objectives. In INDIA,RBI controls the monetary policy. It is announced twice a year, through which RBI,regulate the price stability for the economy. 1.slack season policy April-September 2.Busy season policy October-March
  4. 4. ∫Economic Growth ∫Full Employment ∫Flow of credit in all sectors of economy ∫Price Stability ∫Exchange rate stability OBJECTIVES
  5. 5. Repo Rate LOAN TAKER = BANK Reverse Repo Rate LOAN TAKER = RBI Quantitative measures
  6. 6. Bank rate Open market operations Cash reserve ratio (CRR) Statutory liquidity ratio (SLR) Quantitative measures
  7. 7. Quantitative measures Bank rate : Bank Rate is the rate at which central bank of the country (in India it is RBI) allows finance to commercial banks. Bank Rate is a tool, which central bank uses for short-term purposes.
  8. 8. Open market operations Quantitative measures An open market operation (also known as OMO) is an activity by a central bank to buy or sell government bonds on the open market.
  9. 9. Cash reserve ratio (CRR) Quantitative measures This serves two purposes. It ensures that a portion of bank deposits is totally risk- free. It enables that RBI control liquidity in the system, and thereby, inflation by tying their hands in lending money Always stands between 3 % to 15 %
  10. 10. Ω Moral Suasion Ω Direct Action Ω Regulation in consumer credit Qualitative Measures
  11. 11. REGULATION IN CONSUMER CREDIT Qualitative Measures most of the consumer durables like T.V., Refrigerator, Motorcar, etc. are available on installment basis. If there is excess demand for certain consumer durables leading to their high prices, central bank can reduce consumer credit by (a) increasing down payment, and (b) reducing the number of installments of repayment of such credit.
  12. 12. DIRECT ACTION Qualitative Measures This method is adopted when a commercial bank does not co-operate the central bank in achieving its desirable objectives.
  13. 13. MORAL SUASION Qualitative Measures To arrest inflationary situation central bank persuades and request the commercial banks to refrain from giving loans for speculative and non-essential purposes. On the other hand, to counteract deflation central bank pursuades the commercial banks to extend credit for different purposes.
  14. 14. IF : Bank Rate Bank Rate
  15. 15. CRR/SLR CRR/SLR
  16. 16. •9.00% (28 jan 2014)Bank Rate •4.00% (9 feb 2013)CRR •23% (11 aug 2012)SLR •8.00% (28 jan 2012)Repo Rate •7.00% (28 jan 2012)Reverse Repo Rate •61.19% (on March 2014)Re/$ Current Rates
  17. 17. CASE STUDY CORRECTIVE STEPS TAKEN TO STABILIZE EXCHANGE RATE ( RS ).
  18. 18. Use Indian product. Avoid meeting in five star hotel. Avoid foreign tour. Come out idol money balance in market .

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