Eco Group 5 Central Bank Ppt
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Transcript of Eco Group 5 Central Bank Ppt
CENTRAL BANK
Department of Management studiesSAKEC
Economic Environment of Business
Semester II Prof. Sanchita Chandra
2008-2009
NIKHIL K. 25
JITESH L.
26
ARCHANA L. 27
KASHYAP M. 28
SAGAR M. 29
ISHA M. 30
GROUP 5
INTRODUCTIONA universal monetary institute in modern
times
Constitutes the apex of the money structure of an economy.
Acts as the leader of the money market .
Supervises, controls and regulates the activities of commercial banks.
CENTRAL BANKS
India Reserve Bank of India.
U.S.A. Federal Reserve bank.
U.K. Bank of England.
Pakistan Bank of Pakistan.
DEFINITION
“Institute charged with the responsibility of managing the expansion and contraction of the volume of money in the interest of the general public welfare.”
IMPORTANCE !!!!To control credit.
To issue Paper currency.
To iron out economic crisis.
To implement Monetary and financial Policies.
ESTABLISHMENT OF RBI
Established in April 1935 with a share capital of Rs. 5 crores.
Nationalized in the year 1949. Initially established in Calcutta but
permanently moved to Mumbai in 1937.
FUNCTIONS OF CENTRAL BANK
MONETARY NON-MONETARY
Issue of Currency Notes
Bankers to Government
Banker’s BankCredit ControllerCustodian of Forex
Reserves
Bank’s SupervisionDevelopment
FunctionsData CollectionResearchClearness
CREDIT CONTROL MEASURES
GENERAL CREDIT CONTROLS SELECTIVE CREDIT CONTROLS
Bank RateOpen market
operationsCash Reserve RatioStatutory Liquidity
Ratio
Ceiling on CreditMargin
RequirementsDirectivesMoral Suasion
CURRENT SCENARIOCRR 5%
SLR 24%
Repo Rate 5.5%
Reverse Repo Rate 4%
Inflation 3.92%
RECESSION?
A decline in a country's gross domestic product (GDP) growth for two or more consecutive quarters of a year. A recession is also preceded by several quarters of slowing down.
CAUSES & EFFECTSCausesSlow down of normal Economic Cycle.Consumers lose confidence in growth.
EffectsDecreased demand for goods and services.Stock Market tumbles.
RBI IN RECESSIONCRR cut to 5% Repo rate cut to 5.5%Reverse Repo rate cut to 4%Short-term lending and borrowing rates
cutSlashed tax ratesInjection of MoneyOpening up new borrowing channels for
banksGovernment hikes its spending
RBI HELPING CORPORATE SECTORRestructuring of NPA’S
Diamond industry
Aviation Sector
NBFC’s , Mutual Funds and Banks
Real estate.
FEDERAL RESERVE BANK
Central banking system of the United States.
Created in 1913 by the enactment of the Federal Reserve Act.
Mr.Ben Bernanke, current chairman of the Federal Reserve.
A quasi-public (government entity with private components) banking system.
Changes in Fed Funds rate & Discount rate
CURRENT SCENARIODate
Discount rate
Fed funds rate
Jan – July, 2007 6.25% 5.25%
Dec 11, 2007 4.75% 4.25%
April 30, 2008 2.25% 2.00%
October 29, 2008
1.25% 1.00%
January 16, 2009
0.25% 0.25%
FEDERAL BANK IN RECESSIONCuts Fed funds rates to 0.25%Cuts Discount rates to 0.25%$250-billion bailout package in Tax CutsHigh spending in Energy & Power A.I.G. sought a $85 billion lifelineTakeover of Fannie Mae and Freddie Mac$75-billion package unveiled by ObamaTALF, a program of $200 billion to support Asset-
backed SecuritiesTARP, a program of $700 billion to insure troubled
assetsTerm Auction Facility
CONCLUSIONoCentral Bank is not a Profit Hunting
Institution.Profit is its secondary objective.Its Primary function is to stimulate economic growth of the Country.
oIt reveals complete Transperancy, & Prudence in Nations Economy.
oSo it clearly Justifies the Need & Importance of The Central Bank.
THANK YOU !!!!