Monetary policy of rbi
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Monetary Policy
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CD Deshmukh The First Indian Governor ofReserve Bank of India (RBI)
Dr. D. SubbaraoPresent Governer ofPresent Governer of
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Monetary policy- Meaning
The part of the economic policy which regulates the level of money in the economy in order to achieve certain objectives.
In INDIA,RBI controls the monetary policy. It is announced twice a year, through which RBI,regulate the price stability for the economy.
1.slack season policy April-September
2.Busy season policy October-March
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Importance of Monetary Policy
Gross National Product (GNP) = C + I + G + X
Where: C = Private Consumption expenditure I = Private Investment Expenditure
G = Government Expenditure X = Net Exports
C, I, X can be influenced by the monetary policy which can also influence the private consumption and investment spending and exports and imports.
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∫ Economic Growth
∫ Full Employment
∫ Flow of credit in all sectors of economy
∫ Price Stability
OBJECTIVES
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Exchange rate stability
Equilibrium in balance of payments
Greater equality in the distribution of income and wealth
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ELEMENTS OF MONETARY
POLICY
Qualitative Measures
Quantitative Measures
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Bank rate Open market operations Cash reserve ratio (CRR) Statutory liquidity ratio (SLR)
Quantitative measures
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Ω Rationing of creditΩ Moral SuasionΩ Direct ActionΩ Regulation in consumer creditΩ Changes in margin requirements
Qualitative Measures
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IF :Bank Rate
Bank Rate
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CRR/SLR
CRR/SLR
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LIMITATION OF MONETARY POLICY‡ Non-monetized sector‡ Non-banking financial institution‡ Unorganised financial markets
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¤ Higher liquidity¤ Non-appearance of money¤ Time tag¤ Lack of coordination between
monetary and fiscal policy
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Monetary Policy Of 2011-2012
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•2.9%
Inflation
•9.50%
Bank Rate
•4.75%
CRR•2
4%
SLR
•8.50%
Repo Rate
•7.50%
Reverse Repo Rate
•11.5 to 12%
PLR
•51.27%
Re/$
Current Rates
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ConclusionAs articulated in the June 16th policy statement, RBI will continue to maintain liquidity conditions such that neither surplus liquidity dilutes the monetary policy stance nor large deficit chokes off fund flows to productive sectors of the economy. The market at present has discounted the rise of 25 bps in interest rates but global concerns still continue to weigh on the market.
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http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=6376
http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=5 602
http://stockthoughts.wordpress.com/2008/04/05/what-is-cash-reserve-ratio-and-how-will-the-crr-hike-impact-you/
http://www.banknetindia.com/http://www.investopedia.com/terms/m/
monetarypolicy.aspwww.ask.com/Economics+Definitions
Bibliography
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PRESENTED BY: Amrita Hemrajani (17)Pearlene Jasavala (24) Niharika Kulkarni (30) Khyati Nandu (38) Sanaya Patel (40) Krishma Sandesra (42) Vatsal Shah (50)
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