RESERVE BANK OF INDIA
The primary objective of monetary policy is to maintain price stability while keeping in mind the objective of growth. Price stability is a necessary precondition for sustainable growth. To maintain price stability, inflation needs to be controlled. The government of India sets an inflation target for every five years. RBI has an important role in the consultation process regarding inflation targeting. The current inflation-targeting framework in India is flexible in nature.
Cash Reserve Ratio
Marginal Standing Facility (MSF)
Other than the above-given instruments, RBI uses some other important, too to activate the right kind of the credit and monetary policy—
From the financial year 2016 - 17 (i.e., from 1st April, 2016), banks in the country have shifted to a new methodology to compute their lending rate. The new methodology— MCLR (Marginal Cost of funds based Lending Rate)— which was articulated by the RBI in December 2015. The main features of the MCLR are—
(i) It will be a tenor linked internal benchmark , to be reset on annual basis.
(ii) Actual lending rates will be fixed by adding a spread to the MCLR.
(iii) To be reviewed every month on a pre-announced date.
(iv) Existing borrowers will have the option to move to it.
(v) Banks will continue to review and publish 'Base Rate' as hitherto.
LIQUIDITY MANAGEMENT FRAMEWORK
NATIONALISATION AND DEVELOPMENT OF BANKING IN INDIA
Emergence of the SBI
Emergence of Nationalised Banks
|1. What are the different types of banks in India?
|2. How do I open a bank account in India?
|3. What are the services provided by banks in India?
|4. How can I transfer money from one bank account to another in India?
|5. What is the role of Reserve Bank of India (RBI) in the Indian banking system?