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By-:
Minisha Gupta
Lecturer (Finance)
The Reserve Bank of India was established on April 1, 1935 in
accordance with the provisions of theReserve
Bank of India Act, 1934.
Official Directors
Full-time : Governor and not more than four
Deputy Governors
Non-Official Directors
Nominated by Government: ten Directors from
various fields and one government Official
Others: four Directors - one each from four
local boards
RBI SET UP
Chairman of
Deputy Governor
Each region
Executive Chairman
Quantitative Qualitative
Rationing of Credit
Promoting
Economic
Growth
Monetary Policy
RBI and Monetary Policy in
India
Monetary Magnitudes
•Full employment
•Stable exchange rate
•Healthy Balance of Payment
•Economic growth
•Reasonable Price Stability
•Greater equality in distribution of income & wealth
•Financial stability
Price Stability: The Dominant
Objective
There is convergence of views in developed and developing economies, that
price stability is the dominant objective of monetary policy.
Price stability does not mean complete year-to-year price stability which is
difficult to attain.
Price stability refers to the long run average stability of prices.
Price stability involves avoidance of both inflationary and deflationary
pressures.
Price Stability contributes improvements in the standard of living of people.
It promotes saving in the economy while discouraging unproductive
investment.
Stable prices enable exports to compete in international markets and contribute
to the strengthening of BoP.
Price stability leads to interest rate stability, and exchange rate stability (via
export import stability).
It contributes to the overall financial stability of the economy.
struments Operation of Monetary
Discount Rate
(Bank Rate)
Policy
Reserve Ratios Operating
Target
Open Market
Operations
• Monetary Base
• Bank Credit Intermediate
• Interest Rates Target
•Monetary
Aggregates(M3)
Ultimate
•Long term Goals
interest rates
•Total Spending
• Price Stability
Etc.
Fiscal Policy
The word “FISC” means state treasury
and fiscal policy refers to policy
concerning the use of “state treasury” or
the govt. finances to achieve the
macroeconomic goals.