policy rate Monetary policy is the process by which monetary authority of a country, generally a central bank controls the

supply of money in the economy by exercising its control over interest rates in order to maintain price stability and achieve high economic growth.[1] In India, the central monetary authority is the eserve !ank of India " !I#. is so designed as to maintain the price stability in the economy. monetary tool used for controlling innflation, determining day to day li$uidity operations, and for determining other market rates. deposit rate the interest rate that banking institutions pay to depositors or account holders. bank rate !ank rate, also referred to as the discount rate in %merican &nglish,[1] is the rate of interest which a central bank charges on the loans and advances to a commercial bank. 'henever a bank has a shortage of funds, they can typically borrow from the central bank based on the monetary policy of the country repo rate the repo rate is the rate at which the central bank lends short(term money to the banks against securities. % reduction in the repo rate will help banks to get money at a cheaper rate. 'hen the repo rate increases, borrowing from the central bank becomes more expensive. It is more applicable when there is a li$uidity crunch in the market. reserve repo rate )he reverse repo rate is the rate at which banks can park surplus funds with reserve bank, while the repo rate is the rate at which the banks borrow from the central bank. It is mostly done when there is surplus li$uidity in the market. reserve ratios )he reserve re$uirement "or cash reserve ratio# is a central bank regulation employed by most, but not all, of the world*s central banks, that sets the minimum fraction of customer deposits and notes that each commercial bank must hold as reserves "rather than lend out#. )hese re$uired reserves are normally in the form of cash stored physically in a bank vault "vault cash# or deposits made with a central bank. )he re$uired reserve ratio is sometimes used as a tool in monetary policy, influencing the country*s borrowing and interest rates by changing the amount of funds available for banks to make loans with.[1] 'estern central banks rarely alter the reserve re$uirements because it would cause immediate li$uidity problems for banks with low excess reserves+ they generally prefer to use open market operations "buying and selling government(issued bonds# to implement their monetary policy.

slr ,tatutory li$uidity ratio refers amount that the commercial banks re$uire to maintain in the form of gold or govt. approved securities before providing credit to the customers. -ere by approved securities we mean, bond and shares of different companies. ,tatutory .i$uidity atio is determined and maintained by the eserve !ank of India in order to control the expansion of bank credit. It is determined as percentage of total demand and time liabilities. )ime .iabilities refer to the liabilities, which the commercial banks are liable to pay to the customers after a certain period mutually agreed upon and demand liabilities are such deposits of the customers which are payable on demand. example of time liability is a fixed deposits for / months, which is not payable on demand but after six months. example of demand liability is deposit maintained in saving account or current account, which are payable on demand through a withdrawal form of a che$ue. ,. is used by bankers and indicates the minimum percentage of deposits that the bank has to maintain in form of gold,cash or other approved securities.)hus, we can say that it is ratio of cash and some other approved liabilities"deposits#. It regulates the credit growth in India crr ,tatutory li$uidity ratio refers amount that the commercial banks re$uire to maintain in the form of gold or govt. approved securities before providing credit to the customers. -ere by approved securities we mean, bond and shares of different companies. ,tatutory .i$uidity atio is determined and maintained by the eserve !ank of India in order to control the expansion of bank credit. It is determined as percentage of total demand and time liabilities. )ime .iabilities refer to the liabilities, which the commercial banks are liable to pay to the customers after a certain period mutually agreed upon and demand liabilities are such deposits of the customers which are payable on demand. example of time liability is a fixed deposits for / months, which is not payable on demand but after six months. example of demand liability is deposit maintained in saving account or current account, which are payable on demand through a withdrawal form of a che$ue. ,. is used by bankers and indicates the minimum percentage of deposits that the bank has to maintain in form of gold,cash or other approved securities.)hus, we can say that it is ratio of cash and some other approved liabilities"deposits#. It regulates the credit growth in India 'hat is everse epo rate0

everse epo rate is the rate at which the !I borrows money from commercial banks. !anks are always happy to lend money to the !I since their money are in safe hands with a good interest. %n increase in reverse repo rate can prompt banks to park more funds with the !I to earn higher returns on idle cash. It is also a tool which can be used by the !I to drain excess money out of the banking system. 'hat is a epo ate0

)he rate at which the !I lends money to commercial banks is called repo rate. It is an

instrument of monetary policy. 'henever banks have any shortage of funds they can borrow from the !I. % reduction in the repo rate helps banks get money at a cheaper rate and vice versa. )he repo rate in India is similar to the discount rate in the 1,. marginal standing facility rate Marginal ,tanding 2acility "M,2# is a new scheme announced by the eserve !ank of India " !I# in its Monetary 3olicy "4511(14# and refers to the penal rate at which banks can borrow money from the central bank over and above what is available to them through the .%2 window.

M,2, being a penal rate, is always fixed above the repo rate. )he M,2 would be the last resort for banks once they exhaust all borrowing options including the li$uidity ad6ustment facility by pledging through government securities, which has lower rate of interest in comparison with the M,2. )he M,2 would be a penal rate for banks and the banks can borrow funds by pledging government securities within the limits of the statutory li$uidity ratio. )he scheme has been introduced by !I with the main aim of reducing volatility in the overnight lending rates in the inter(bank market and to enable smooth monetary transmission in the financial system. reference rate % reference rate is a rate that determines pay(offs in a financial contract and that is outside the control of the parties to the contract. It is often some form of .I!7 rate, but it can take many forms, such as a consumer price index, a house price index or an unemployment rate. 3arties to the contract choose a reference rate that neither party has power to manipulate. exchange rate In finance, an exchange rate "also known as a foreign(exchange rate, forex rate, 28 rate or %gio# between two currencies is the rate at which one currency will be exchanged for another. It is also regarded as the value of one country9s currency in terms of another currency.[1] 2or example, an interbank exchange rate of :1 ;apanese yen ";3<, =# to the 1nited ,tates dollar "1,># means that =:1 will be exchanged for each 1,>1 or that 1,>1 will be exchanged for each =:1. &xchange rates are determined in the foreign exchange market,[4] which is open to a wide range of different types of buyers and sellers where currency trading is continuous? 4@ hours a day except weekends, i.e. trading from 45?1A BM) on ,unday until 44?55 BM) 2riday. )he spot exchange rate refers to the current exchange rate. )he forward exchange rate refers to an exchange rate that is $uoted and traded today but for delivery and payment on a specific future date. Cefinition of *Ceposit Interest ate*

)he interest rate paid by financial institutions to deposit account holders. Ceposit accounts include certificates of deposit, savings accounts and self(directed deposit retirement accounts.

Ceposit

ate Meaning?

In deposit terminology, a term Ceposit ate refers to the amount of money paid out in interest by a bank or financial institution on cash deposits. !anks pay deposit rates on savings and other investment accounts. base rate base rate generally refers to the "base# class probabilities unconditioned on featural evidence, fre$uently also known as prior probabilities. In plainer words, if it were the case that 1D of the public were Emedical professionalsE, and ::D of the public were not Emedical professionalsE, then the base rate of medical professionals is simply 1D. In science, particularly medicine, the base rate is critical for comparison. It may at first seem impressive that 1555 people beat their winter cold while using *)reatment 8*, until we look at the entire *)reatment 8* population and find that the base rate of success is actually only 1F155 "i.e. 155 555 people tried the treatment, but the other :: 555 people never really beat their winter cold#. )he treatment*s effectiveness is clearer when such base rate information "i.e. E1555 people... out of how many0E# is available. Gote that controls may likewise offer further information for comparison+ maybe the control groups, who were using no treatment at all, had their own base rate success of AF155. Hontrols thus indicate that *)reatment 8* actually makes things worse, despite that initial proud claim about 1555 people. )he normative method for integrating base rates "prior probabilities# and featural evidence "likelihoods# is given by !ayes rule.I