Академический Документы
Профессиональный Документы
Культура Документы
POLICY
OBJECTIVES OF MONETARY
POLICY
Maintaining price stability
Ensuring adequate flow of credit to the
productive Sectors of the economy to support
economic growth
Rapid economic growth
Balance of payment equilibrium
Full employment
Equal income distribution
Methods
The RBI aims to achieve its objectives of
economic growth and control of inflation
through various methods.
These methods can be grouped as:
General/ quantitative methods
Selective/ qualitative methods
Direct Instruments
Cash reserve ratio (CRR)
The money supply in the economy is influenced by CRR.
It is the ratio of a banks time and demand liabilities to be kept in reserve with
the RBI.
The RBI is authorized to vary the CRR between 3% and 15%.
Indirect Instruments
Liquidity Adjustment Facility (LAF):
Consists of daily infusion or absorption of liquidity on a
repurchase basis, through repo (liquidity injection) and
reverse repo (liquidity absorption) auction operations,
using government securities as collateral.
i.
Repo Rate:
Bank rate:
Bank Rate is the rate at which central bank of the country (in India it is RBI) allows
finance to commercial banks.
Bank Rate is a tool, which central bank uses for short-term purposes.
Any upward revision in Bank Rate by central bank is an indication that banks should also
increase deposit rates as well as Base Rate / Benchmark Prime Lending Rate.