The document discusses monetary policy, defining it as actions by authorities to influence money supply, interest rates, and money availability to achieve objectives. It outlines the elements of monetary policy as regulating money supply, banking systems, and interest rates. The objectives are listed as regulating money supply, price stability, economic growth, and others. Types of monetary policy controls discussed include quantitative tools like bank rates, cash reserve ratios, and qualitative tools like moral persuasion and credit monitoring. Limitations and ways to improve monetary policy are also presented.

1. MONETARY
POLICY
BY: Diksha Garg
Roll no 1213007
Mba 1

2. Definition of Monetary Policy
• The monetary policy is defined as an act
undertaken by the authorities designed
to influence-
Money supply
Rate of interest
The availability of money for
achieving specific objectives

3. Elements Of Monetary
Policy
• It regulates money supply.
• It regulates entire banking system of the
economy.
• It regulates the level and structure of
interest rates.
• It determines the allocation of loans
among data structure.
• It tries to achieve price stability.

4. Objectives Of Monetary Policy
To regulate money supply in the economy.
To attain price stability.
To promote economy growth.
To control business cycle.
To promote more exports and substitute
imports.
To ensure more creditiy for priority sector.
To promote employment.

5. Types Of Control

6. Quantitative Control
Bank rate
Cash Reserve Ratio
Statutory Liquidity Ratio
Multiple rate of interest
Repo rate
Reverse repo rate

7. • Minimum rate at which the central bank
provides loans to commercial banks Bank Rate
• Amount of money that banks must set aside
with RBI against their deposits
Cash Reserve
Ratio (CRR)
• Percentage of bank funds to be maintained in
government and approved securities
Statutory Liquidity
Ratio (SLR)
• Rate at which RBI lends to other banks against
government securities Repo Rate
Reverse Repo Rate • Rate at which RBI borrows from other banks
• If bank take loans beyond the fixed quota then
then rate other than bank rate is applied
Multiple rate of
interest

8. Current Rates
Bank Rate •9.0%
CRR •4.0%
SLR •23.0%
Repo Rate •7.50%
•6.50% Reverse Repo
Rate

9. Qualitative Control
Change in margin requirement
Moral persuation
Credit monitoring
Direct action
Ceiling on loans

10. Features Of Monetary Policy
Active policy
Controlled money supply
Seasonable variations
Flexible
Investment and saving oriented
Wide range of methods of credit
control

11. Limitations of Monetary
Policy
Limited scope of monetary policy
Limited role in controlling prices
Existence of black money
Conflicting objectives
Lack of co-ordination with fiscal policy
Limitation of monetary instruments

12. Cont…
Non-monetized sector
Lack of banking facilities
Peruassive policy
Imbalance in credit allocation
Poor implementation

13. Suggestion For Improvement In
Monetary Policy
• Price stability
• Credit planning
• Proper implementation
• Co-ordination of monetary policy
and fiscal policy

14. Thank you

15. Any Qwery