BY FAHAD M NAYEEM YATOO NIKHILESH PATIL MOHAMMED RIYAS P

RBI is the Central Bank of the country. It has been established 1st April 1935. RBI started as shareholders bank with a paid-up capital of Rs.5 crores. On establishment it took over the function of management of currency from the Govt. of India and power of credit control from the Imperial Bank of India.

Formulates implements and monitors the monetary policy. To give the public adequate quantity of suppliers of currency notes and coins in a good quality. Maintenance of foreign exchange market of India. To secure reasonable price stability

Promotion of Commercial Banking Promotion of Rural Credit Promotion of Co-operative Credit Promotion of Industrial Finance Promotion of Export Credit Regulation of Credit Credit to Weaker Sections Development of Bill Market Exchange Controls

It refers to use of instruments with in the control of the Central bank to influence the level of aggregate demand for goods and services or to influence the trends in certain sectors of the economy. It is usually defined as the central banks policy pertaining to the control of the availability, cost and use of money and credit with the help of monetary measures in order to achieve specific goals.

According to PAUL EINZIG, Monetary policy is the attitude of the political authority towards the monetary system of the community under its control. According to JOHNSON, Monetary policy is defined as policy employing central banks control of the supply of money as an instrument for achieving the objectives of general economic policy.

GENERAL (QUANTITATIVE) METHODS:1.Bank Rate:It is also known as Discount Rate. It is the rate at which the central bank discounts. The bank rate policy seeks to affect both the cost and availability of credit.
A.

2.Open Market Operations:It refers broadly to the purchase and sale by the central bank of a variety of assets, such as foreign exchange,gold,govt. securities and even company shares.

3.Variations in the Reserve Requirement:a).CRR b).SLR This ratio can be raised or lowered by Reserve Bank. Rising of the ratio leads to reduction in the lending capacity of commercial banks by a multiple depending on the reserve requirement which influences the velocity of circulation of credit money.

B.SELECTIVE (QUALITATIVE) METHODS:1. Rationing of Credit 2. Margin Requirement 3. Variable Interest Rates 4. Regulation of Consumer Credit 5. Licensing

It may be defined as that part of governmental economic policy which deals with taxation, expenditure, borrowing and the management of public debt in a economy. According to Paul Samuetson, Fiscal policy means public expenditure and tax policy. It is an instrument of modern public finance.

Budgetary Policy Taxation Policy Public Debt Public Expenditure 1). Pump Priming 2). Compensatory Spending

Fiscal Fiscal Fiscal Fiscal

Policy Policy Policy Policy

for Full Employment and Economic Stabilization and Economic Growth and Social Justice