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Monetary Policy of RBI

The document outlines the objectives and process of India's monetary policy. It discusses maintaining price stability, controlled bank credit expansion, inflation, unemployment, and exchange rates as objectives. The monetary policy committee sets policy which is implemented by the Reserve Bank of India's monetary policy department and financial markets committee. Key policy instruments include the repo rate, reverse repo rate, liquidity adjustment facility, marginal standing facility, cash reserve ratio, statutory liquidity ratio, and open market operations. The rates are used to increase or decrease money supply and maintain the inflation target band. Recently rates were reduced to support the economy during the COVID-19 pandemic.

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Kirti Park
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52 views10 pages

Monetary Policy of RBI

The document outlines the objectives and process of India's monetary policy. It discusses maintaining price stability, controlled bank credit expansion, inflation, unemployment, and exchange rates as objectives. The monetary policy committee sets policy which is implemented by the Reserve Bank of India's monetary policy department and financial markets committee. Key policy instruments include the repo rate, reverse repo rate, liquidity adjustment facility, marginal standing facility, cash reserve ratio, statutory liquidity ratio, and open market operations. The rates are used to increase or decrease money supply and maintain the inflation target band. Recently rates were reduced to support the economy during the COVID-19 pandemic.

Uploaded by

Kirti Park
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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CLASS :- TYBAF DIV.

:- A
556 - Suraj Gupta
557 - RINKI PAL
558 - NITIN KUMAR UPADHAYA
559 - TUBA JAFRI
560 – NITESH NALAWADE
➢
Objectives of the Monetary Policy of India
➢ Price Stability
➢ Controlled Expansion Of Bank Credit
➢ Inflation
➢ Unemployment
➢ Currency exchange rates
Monetary Policy Process
Monetary policy committee(MPC)

Reserve Bank’s Monetary policy


Department(MPD)

Financial Markets Operations


Department(FMOD)

Financial Market Committee(FMC)


Monetary Policy Instruments
➢ Repo Rate
➢ Reverse Repo Rate
➢ Liquidity Adjustment Facility (LAF)
➢ Marginal Standing Facility (MSF)
➢ Corridor
➢ Bank Rate
➢ Cash Reserve Ratio (CRR)
➢ Statutory Liquidity Ratio (SLR)
➢ Open Market Operations (OMOs)
Repo Rate

Open Market Reverse


Operations
(OMOs) Repo Rate

Liquidity
Statutory
Adjustment
Liquidity
Ratio (SLR) Monetary Facility
(LAF)
Policy
Instruments

Marginal
Cash
Standing
Reserve
Facility
Ratio (CRR)
(MSF)

Bank Rate Corridor


Data Analysis & Interpretation :-
Conclusion
➢ To maintain the goal of the monetary policy framework and keep
the inflation in the band of 2% above and below the 4% inflation
target the RBI has used the monetary policy instruments to increase
or decrease the supply of money in the economy.
➢The Reserve Bank of India had reduced the repo rate and reverse
repo rate to 4.40% and 4.00% on 27 March. However, with
coronavirus pandemic hurting the economy, the central bank has
reduced the reverse repo rate by another 25 basis points on 17 April.
Following the reduction, the reverse repo rate stands at 3.75%.
➢On 27 March, the central bank had reduced the Marginal Standing
Facility (MSF) rate and the bank rate to 4.65% respectively.

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