comprehensive report on bank rates and its implication

1. Bank rates and its implication on
Indian economy
The project report deals with the bank rates
and its consequences on Indian economy .
These rates are form the basis for
development of economy directly and
indirectly

2. Research methodology
• The research has been done using secondary sources:
1. Internet
2. Fortnight journals
3. Newspapers and magazines..
4. Books of senior secondary and graduation to clear
concepts.
5. The research has been done and data for various years
has been compared to figure out the current
scenario….
6. The focus on basics has been our main objective for
having a general idea of what the bank rate is all
about…

3. Objectives Process Tree
• To find out the monetary and
liquidity position of Indian
economy.. Bank rates
• To figure out how does it
Affects the economy. Monetary
policy
• To find out various tools and
measures to implement bank
rates.
Control
inflation
• To understand the concept of
money supply and monetary Sustain the
policy. economy
• To understand inflation.

4. Concepts
Bank rates • Interest rate charged by country’s central on
loans and advances to control money supply in
the economy and banking sector .
RR,RRR
Monetary • Policy by which central bank controls
policy money supply in the economy, targeting the
rate of interest
CRR,SLR Quantitative, Qualitative
• Money stock is total amount of money
Money supply available at a specific time in the economy
M1 M2 M3 M4
Inflation • Rise in general price level of G/S in the
economy over a period of time .
CPI WPI GDP Deflator.

5. Findings and results
Year Money
supply
Feb 2008 4060194
Sept 2008 4302878
Dec 2008 4414019
Mar 2009 4670399
July 2009 5028951
Jan 2010 5337566
May 2010 5677067
During this period money
Due to this decrease in money
supply increased at a
supply the R.B.I injected
decreasing rate reason being
liquidity in the market by
the Global turmoil at this
decreasing interest rates.
time…..

6. A more recent scenario
Cash reserve ratio has been
constant from the last year at
6%
Current rates scenario
35
30 Reserve repo rate has increased
25 by 3 percentage points from
5.25% to 7.25%
20
15
10
5 Repo rate has increased 2
percentage points from 6.25 %
0
to 8.25%
2007 2008 2009 2010 2011
bank rate Repo rate
Reverse Repo rate cah reserve ratio Bank rate has grown
consistently over the period of
Inflation has been the major reason for five years at 6%
tightening of interest rates ,affecting the
liquidity position in the economy

7. Findings and results
Inflation at India Inflation Rate at 8.99 percent.
The inflation rate in India was last
peak reported at 9 percent in August of
2011.Rbi has almost taken 11
hikes in key interest rates in
order to control inflation..
Rising inflation and slowing
demand would moderate India's
economic growth to 8 per cent
during 2011-12 from 8.8 per
cent in the previous fiscal, said a
World Bank report

8. Calculations and facts
• The Data for cash reserve ratio (CRR) are as percentage of net demand and
time liabilities (NDTL) as per Section 42 of the RBI Act, 1934.
• Till Oct. 28, 2004, nomenclature of Repo indicated absorption of liquidity
where Reverse Repo meant injection of liquidity by the Reserve Bank.
• However , with effect from 29 October 2004 nomenclature of Repo and
Reverse Repo has been interchanged as per international usages.
• Beginning May 03, 2011 the repo rate became the single independently
varying policy rate to single the monetary policy stance.
• The reverse repo rate continues to be operative but it is now pegged at a
fixed 100 basis points below the repo rate and is no longer an independent
rate…..

9. bibliography
• Data has been collected from various sites and various books have
been used for clearing of concepts..
1. Wikipedia.org
2. Investopedia.com
3. Franklintempelton.org.in
4. Economictimes.indiatimes.com
5. Rbi.org.in
• Books consulted
1. Macro economics concepts-Sp jain
2. Macro economics India-Ck Gupta
3. Macro economics – TR jain V.K ohri

10. Our interpretation
Money
• Used as an effective tool
to monitor economic
supply • Rise in general price level
growth.. • Determines the total • Affects the economic
amount of currency growth of the country
• Used mainly to control floating in the economy.
money supply
• Is considered as a major
factor for inflation
Bank rates Inflation

11. Thank you
• Group No: 1
• Ankit singh karki
• Faisal khan
• Soumya umesan
• Purnadal bagchi
• Charu chaudhari