Group Members

Sarmistha Sahoo
Babaji Prusty

Kaberi Majhi
 Monetary policy is the policy
by which the monetary
authority of the country
controls the supply of money.

Monetary policy refers to the

use of instruments under the
control of the RBI to regulate
the availability cost and use
of money and credit.
 Rapid growth of economics
Price stability
Exchange rate stability
Full employment/Increased employment
Equal income distribution
Balance of Payment(BOP) equilibrium
 The Reserve Bank of India(RBI) is the central
banking system of India and controls the
monetary policy of rupee.
This institution was established on 1 April
1935 and plays an important role in the
development strategy of Government.
 Monetary Policy is communicated to the public
mostly by annual policy statement in April and
mid-term review on October.
The statements today are more analytical and
elaborate & RBI website is an effective medium of
communication.
Governor, Deputy Governors, committee of board
meet every week to review the monetary, economic
and financial conditions.
Periodic consultations and Ministry of Finance for
significant technical, analytical, institutional and
dynamic inputs.
 Governor of RBI

1935-1937 2 0 1 3 - Present

Sir Osborne Smith Raghuram Rajan

1st Governor of RBI Present Governor of RBI
1. Issue of Bank notes
2. Banker to Government
3. Custodian of Cash Reserves of Commercial
Banks
4. Custodian of Countrys Foreign Currency
Reserves
5. Lender to Last Resort
6. Central Clearance and Accounts Settlement
7. Controller of Credit
 Cash Reserve Ratio:-
Cash Reserve Ratio is a certain
percentage of bank deposits which banks are
required to keep with RBI in the form of reserves or
balances.
Statutory Liquidity Ratio:-
The minimum percentage of deposit
that the bank has to maintain in the form of gold,
cash or other approved securities are known as
Statutory Reserve Ratio.
 Bank Rate:-
The rate at which RBI lends money to
domestic banking system. The Bank Rate is also
known as Discount Rate.
This banking system involves commercial banks,
co-operative banks, IFC, EXIM Bank and other
approved financial institution.

Call Money Rate:-

The rate at which commercial bank
borrows money from other commercial banks for a
short period.
 Prime Lending Rate:-
The rate at which the commercial
bank can provide credit to industries or business.

Deposit Rate:-
The rate of interest at which the
customers are paid interest on their bank deposits.

Bond Rate:-
To meet expenses for the
development, Government issues the bond
maturing in definite period at a definite rate.
 Repo and Reserve Rate:-
The interest rate at which RBI
provides loan to commercial banks is
known as REPO RATE.
The rate at which RBI takes short term
credit is known as RESERVE REPO RATE.
 Operations Rate
Bank Rate 9%

CRR 4%
Current RBI
SLR 22%
Rates:-
Repo Rate 8%

Reserve Repo Rate 7%

Inflation 8%

Marginal Standing 9%
Facility Rate
 Lending
Rate
Money
Economy
Supply

Interest
Inflation
Rate
Gross
Domestic
Product
(GDP)
 Economy:-
The state of a country or region in
terms of the production and consumption of
goods and services and the supply of money.

Money Supply:-
The total stock of money circulating
in an economy is the money supply. The
circulating money involves the currency,
printed notes, money in the deposit accounts
and in the form of other liquid assets.
 Inflation:-
Inflation occurs due to an imbalance
between demand and supply of money,
changes in production and distribution cost or
increase in taxes on products. When economy
experiences inflation, i.e. when the price level
of goods and services rises, the value of
currency reduces.
Formula for calculating Inflation=
(WPI in month of current year-WPI in same
month of previous year)
----------------------------------------
------------------------ X 100
WPI in same month of previous year
 Lending Rate:-
Lending Rate is the rate at
which financial institutes lend money. It
constitutes the base from which banks
then lend money to the final customer.

Interest rate:-
An interest rate is the rate at
which interest is paid by a borrower (debtor)
for the use of money that they borrow from a
lender(creditor). Specifically, the interest rate
(I/m) is a percentage of principal (P) paid a
certain number of times (m) per period (usually
quoted per year).
 'GROSS DOMESTIC PRODUCT - GDP'
The monetary value of all
the finished goods and services produced
within a country's borders in a specific time
period, though GDP is usually calculated on
an annual basis. It includes all of private
and public consumption, government
outlays, investments and exports less
imports that occur within a defined
territory.
GDP = C + G + I + NX
where:
"C" is equal to all private consumption, or
consumer spending, in a nation's economy
"G" is the sum of government spending
"I" is the sum of all the country's businesses
spending on capital
"NX" is the nation's total net exports, calculated
as total exports minus total imports. (NX =
Exports - Imports)
 Restricted Scope of Monetary Policy in Economic
Development.
Limited Role in Controlling Prices.
Unfavourable Banking Habits.
Underdeveloped Money Market.
Existence of Black Money.
Conflicting Objectives
Influence of Non-Monetary Factors
Limitations of Monetary Instruments
Proper Implementation of the Monetary Policy:
Thank You