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Monetary Policy
Guided By :
Dr. Bibhunandini Das
Presented By :
Sunanda Priyadarshini
Reg No: 200402100026
Monetary Policy Committee Members of RBI
Shri Shaktikanta
Das
RBI GOVERNOR
Dr. Michael
Debrata Patra
RBI DEPUTY GOVERNOR
Dr. Mridul Saggar
EXECUTIVE DIRECTOR
RBI
Dr. Ashima Goyal
EXTERNAL
Prof. Jayanth
Varma
EXTERNAL
Dr. Shashanka
Bhinde
EXTERNAL
Monetary Policy ?
1
OBJECTIVES OF MONETARY POLICY
 TO PROMOTE ECONOMIC GROWTH
 TO PROMOTE ECONOMIC STABILITY
 TO PROMOTE EXCHANGE RATE STABILITY
Monetary Policy Tools
 Quantitative / General Tools
 Qualitative / Selective Tools
2
Bank Rate
RBI
SBI
Rate at which RBI extends an
unsecured loan to
commercial banks.
PNB UCO
RBI
SBI PNB UCO
Open Market Operations
Purchase of securities.
Sale of securities.
Cash Reserve Ratio
RBI
SBI
Minimum percentage which
commercial bank has to keep
in form of cash, balance with
RBI.
UCO
PNB
Statutory Liquidity Ratio
RBI SBI
Rate at which commercial
banks need to maintain
reserve in liquid form with
itself.
UCO
PNB
Directs
Repo Rate
RBI
SBI
Rate at which RBI lends money
to commercial banks for a
short term.
PNB UCO
Reverse Repo Rate
RBI
SBI
Rate at which commercial
banks gets interest from RBI
for parking their short term
excess funds.
UCO
PNB
CEILING ON CREDIT :
Limiting on level of credit restricts the lending capacity of a bank to
grant advance on certain controlled securities.
MARGIN REQUIREMENTS :
DISCRIMINATORY INTEREST RATE :
Difference between the current value of security offered for a loan and
the value of the loan granted.
RBI reduces the interest rates on the sector, RBI wants the sector to
grow and vice-versa.
DIRECTIVES :
RBI issues directives for the commercial banks.
MORAL SUASION :
DIRECT ACTION :
RBI pressures to follow the directives to the commercial bank.
RBI may initiate direct action against the commercial banks if they
don’t comply with the directives.
Monetary Policy 2019-2020
● Stealth Rate Cut (Repo Rate – 14days)
● Long Term Repo Rate (1year – 3year)
● Relaxation in CRR(For Excluding Retail Loans - Jan 2020 – July 2020)
● Restructuring Schemes for Loans to MSMEs(From Jan-2019 – Dec-2020)
● Leniency in Real Estate Projects.
Monetary Policy 2020-2021
● Inflation has eased below the tolerance level of 6%
● There’s an improvement in capacity utilization in manufacturing sector
Q1 – 47.3% Q2- 63.3%
● RBI will launch a platform named “Retail Direct” that would ease the
process of purchasing government securities.
Monetary Policy 2021-2022
● Repo rate remained unchanged for the sixth time in a row.
● Measures to control the rising price of crude oil.
● Vaccination process is expected to gather steam and help to normalize the
economic activity.
● Purchased 60, 000 crore bonds in G-SAP and would purchase 1.2lakh
crore bonds (Government Security Acquisition Programs)
Indian Repo Ratio
Indian Annual GDP Growth Rate
 TO PROMOTE ECONOMIC GROWTH
Indian Reverse Repo Rate
Indian Annual GDP Growth Rate
 TO PROMOTE ECONOMIC GROWTH
Analysis
● Repo rate and Reverse Repo rate are 4% and 3.35%
respectively as there is a negative GDP percentage during
July 2020.
● To promote growth in the economy the bank rates are
reduced by RBI.
Indian Inflation Rate Indian Repo Ratio
 TO PROMOTE ECONOMIC STABILITY
Indian Cash Reserve Ratio
Indian Inflation Rate
 TO PROMOTE ECONOMIC STABILITY
Analysis
● Repo rate and CRR rate are 4% and 3% respectively even if
there’s inflation in the economy.
● To promote economic stability in the economy the bank
rates are reduced by RBI.
32
Conclusion
● Monetary policy had to deal with twin challenges of reviving
growth form the ravages of COVID-19 while also ensuring
that inflation was under control.
● The pace of economic recovery in 2020-21 turned out to be
faster than earlier anticipations.
Thanks!

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Monetary Policy by RBI

  • 1. Monetary Policy Guided By : Dr. Bibhunandini Das Presented By : Sunanda Priyadarshini Reg No: 200402100026
  • 2. Monetary Policy Committee Members of RBI Shri Shaktikanta Das RBI GOVERNOR Dr. Michael Debrata Patra RBI DEPUTY GOVERNOR Dr. Mridul Saggar EXECUTIVE DIRECTOR RBI Dr. Ashima Goyal EXTERNAL Prof. Jayanth Varma EXTERNAL Dr. Shashanka Bhinde EXTERNAL
  • 4.
  • 5. OBJECTIVES OF MONETARY POLICY  TO PROMOTE ECONOMIC GROWTH  TO PROMOTE ECONOMIC STABILITY  TO PROMOTE EXCHANGE RATE STABILITY
  • 6. Monetary Policy Tools  Quantitative / General Tools  Qualitative / Selective Tools 2
  • 7.
  • 8. Bank Rate RBI SBI Rate at which RBI extends an unsecured loan to commercial banks. PNB UCO
  • 9.
  • 10. RBI SBI PNB UCO Open Market Operations Purchase of securities. Sale of securities.
  • 11.
  • 12. Cash Reserve Ratio RBI SBI Minimum percentage which commercial bank has to keep in form of cash, balance with RBI. UCO PNB
  • 13.
  • 14. Statutory Liquidity Ratio RBI SBI Rate at which commercial banks need to maintain reserve in liquid form with itself. UCO PNB Directs
  • 15.
  • 16. Repo Rate RBI SBI Rate at which RBI lends money to commercial banks for a short term. PNB UCO
  • 17.
  • 18. Reverse Repo Rate RBI SBI Rate at which commercial banks gets interest from RBI for parking their short term excess funds. UCO PNB
  • 19.
  • 20.
  • 21. CEILING ON CREDIT : Limiting on level of credit restricts the lending capacity of a bank to grant advance on certain controlled securities. MARGIN REQUIREMENTS : DISCRIMINATORY INTEREST RATE : Difference between the current value of security offered for a loan and the value of the loan granted. RBI reduces the interest rates on the sector, RBI wants the sector to grow and vice-versa.
  • 22. DIRECTIVES : RBI issues directives for the commercial banks. MORAL SUASION : DIRECT ACTION : RBI pressures to follow the directives to the commercial bank. RBI may initiate direct action against the commercial banks if they don’t comply with the directives.
  • 23. Monetary Policy 2019-2020 ● Stealth Rate Cut (Repo Rate – 14days) ● Long Term Repo Rate (1year – 3year) ● Relaxation in CRR(For Excluding Retail Loans - Jan 2020 – July 2020) ● Restructuring Schemes for Loans to MSMEs(From Jan-2019 – Dec-2020) ● Leniency in Real Estate Projects.
  • 24. Monetary Policy 2020-2021 ● Inflation has eased below the tolerance level of 6% ● There’s an improvement in capacity utilization in manufacturing sector Q1 – 47.3% Q2- 63.3% ● RBI will launch a platform named “Retail Direct” that would ease the process of purchasing government securities.
  • 25. Monetary Policy 2021-2022 ● Repo rate remained unchanged for the sixth time in a row. ● Measures to control the rising price of crude oil. ● Vaccination process is expected to gather steam and help to normalize the economic activity. ● Purchased 60, 000 crore bonds in G-SAP and would purchase 1.2lakh crore bonds (Government Security Acquisition Programs)
  • 26. Indian Repo Ratio Indian Annual GDP Growth Rate  TO PROMOTE ECONOMIC GROWTH
  • 27. Indian Reverse Repo Rate Indian Annual GDP Growth Rate  TO PROMOTE ECONOMIC GROWTH
  • 28. Analysis ● Repo rate and Reverse Repo rate are 4% and 3.35% respectively as there is a negative GDP percentage during July 2020. ● To promote growth in the economy the bank rates are reduced by RBI.
  • 29. Indian Inflation Rate Indian Repo Ratio  TO PROMOTE ECONOMIC STABILITY
  • 30. Indian Cash Reserve Ratio Indian Inflation Rate  TO PROMOTE ECONOMIC STABILITY
  • 31. Analysis ● Repo rate and CRR rate are 4% and 3% respectively even if there’s inflation in the economy. ● To promote economic stability in the economy the bank rates are reduced by RBI.
  • 32. 32 Conclusion ● Monetary policy had to deal with twin challenges of reviving growth form the ravages of COVID-19 while also ensuring that inflation was under control. ● The pace of economic recovery in 2020-21 turned out to be faster than earlier anticipations.