Monetary policy tools.pptx

Qualitative and quantitative monetary policy tools of RBI including Repo, Reverse Repo, CRR, SLR.

1. Monetary Policy Instruments of RBI MSS Credit rationing Credit ceiling Credit authorization Directives 1 (LAF: Liquidity Adjustment Facility)

2. Qualitative instruments or tools of RBI 2

3. Qualitative instruments or tools of RBI 3

4. Qualitative instruments or tools of RBI 4

5.  Directives – regarding loan advances to crops & fixing lending rates.  Fixation of margin requirements  Credit rationing – to ensure overall development 5 Qualitative instruments or tools of RBI

6. Quantitative instruments or tools of RBI 6

7. Quantitative instruments or tools of RBI 7

8. Quantitative instruments or tools of RBI 8

9. Quantitative instruments or tools of RBI 9

10. Repo rate is the rate at which the RBI lends to commercial banks by purchasing securities while bank rate is the lending rate at which commercial banks can borrow from the RBI without providing any security. Repo rate Vs. bank rate 10

11. Quantitative instruments or tools of RBI 11

12. Current rates (as of July 202 3 ) of key RBI indicators: 12 To control inflation RBI will follow dear or contractionary monetary policy to reduce money supply in the economy. It will increase reserve ratios (CRR,SLR), sell government securities under OMOs or raise various rates such as REPO, MSF, Bank rates, etc.

13. Impact of RBI’s monetary policy instruments: 13