BAWANKULE BHUSHAN, E-03

1
ABHISHEK MAVI, E-04
PRIYADARSHINI TYAGI, E-35

12/21/2019
Refers to the credit control measures adopted by the central bank of a
country. 2
Monetary policy “as policy employing central bank’s control of the supply of
money as an instrument for achieving achieves of general economic policy.”

12/21/2019
 Full Employment
 Price Stability
 Economic Growth
 Balance of Payments
 Exchange Rate Stability
 Neutrality of Money
 Equal Income Distribution

12/21/2019 3
 Expansionary Monetary Policy Aims
Underatrule
encouraging
Contraction
Under such in amoney
based
moderating spending
policy
the
policy supply
money
cyclical
rather ison goods
achieved
supply
fluctuations
than and
by
in
getting
services
increasing
related
the byvariables
economy
constrained expanding
the policy
by and the
are supply
rates,
the stabilizing
pre-set ofthe
controlled
rule,the credit
increasing and
economythe
by
central
 Contractionary Monetary Policy
money
reserve
around byrequirements
lowering
predetermined
its
banks, after trendthe
rules,
assessing policy
norms
theand
path rates (bank
andpurchasing
standards
by
emerging rate
the
following
economic
 Countercyclical Monetary Policy or repo and
government
countercyclical
scenario rate),
securities lowering
measures
using from
its own the
the market
judgment, reserve
can
requirements
change the valuesand purchasing
of money the supply government
and the
 Rule Based Monetary Policy securities from the market
related variables
 Discretionary Monetary Policy

12/21/2019 4
 Bank Rate  Rationing of Credit
 Open Market Operations  Margin Requirements
 Variation in the Reserve Requirement  Publicity
 Repo rate and Reserve Repo Rate  Regulation of Consumer Credit
 Liquidity Adjustment Facility  Moral Suasion
 Direct Action

This
The allows
Whenever
By
Theychanging
bank banks
the
are means
rate,the toratio,
banks
also
of borrow
have Themoney
implementing
known any through
reserve
as shortage
the bank
monetary
Discountof Moral
RBI
Margin
If
It there
aims
Under Suasion
uses is
to
the media
islimit
the means
excess
the
banking for persuasion
the
difference
demand
total amount
Regulationpublicity
b/w theand
for certain
of
Act, ofrequest.
market
the its
consumer
Central To
repurchase
funds
seeks
policythey
Rate, isto
bythe agreements.
influence
can
whichborrow
a the
oldest centralThis
itcredit
from
instrument arrangement
RBI.
creation
bank • Repo
of power
controls rate
monetaryits arrestand
views
value
durable
loans
Bank on
of
has inflationary
athe current
security
leading
advances
the and
to their situation
market
itstomaximum
high
granted
authority prices,
by
take central
condition and
loan
central
strict bank
action
allows
is
ofthe
policy.
nationalbanks
therate
commercial
Bank
money to respond
at which
rate isbanks
banks
supplytheby to liquidity
borrow
rate
buying rupees
at which from
and selling
the RBI persuades
its
can directions
value.reduce
commercial
against any and
Marginal ofrequest
that
consumer
banks the therequired
willcredit
be
requirement commercial
byofincreasing
commercial loan
bank banks
to can
be down
that to
pressures
RBI
discounts
government and securities
is used by governments to
or other financial refrain
implemented
be from
increased
payment,
refuses to andgiving
by
or the
obey loans
commercial
decreased
reducing
the for speculative
tothe banks
control
directions to by
the
number
given andof
assure basic stability in the financial markets
instrument non-essential
control
flow
Reserve the
of money
instalments Bank purposes
unrest
of repayment
of India of such credit 12/21/2019 5
 Control Inflation or Deflation
 Availability of the Supply of money and Credit
 Integrated Interest Rate Structure
 Effective Central Banking
 Long-Term Loans for Industrial Development
 Creation of Financial Institutions

12/21/2019 6
7

THE END

12/21/2019