3)Bank rate
0
2
4
6
8
9
1 -9
2
2
9
1 -9
3
3
9
1 -9
4
4
9
1 -9
5
5
9
1 -9
6
6
9
1 -9
7
7
9
1 -9
8
8
9
1 -9
9
9
1 -0
0
0
2 -0
1
1
0
2 -0
2
0
2 -0
3
3
0
2 -0
4
4
0
2 -0
5
5
0
2 -0
6
6
0
2 -0
7
7
0
2 -0
8
8
0
2 -0
9
CRR
INFLATION
EFFECT OF CRR BY INFLATION
EFFECT OF CRR WITH GDP
STATUTORY LIQUIDITY
RATIO
In India, RBI has imposed another reserve requirement in addition to CRR
it is called statutory liquidity ratio
The SLR is the proportion of the total deposits which commercial banks are
Statutorily required to maintain in the form of liquid assets in addition to
Cash reserve ratio
post reform(1991
-2009)
50
40 39 3835
30 31
20 25 25 25 25 2524
10 SLR RATE
0
19
193
195
197
19
201
203
205
207
209
OPEN MARKET
OPERATIONS
An important instrument of monetary policy, that Reserve bank of India purchases
And sells securities in open market operations
P S
U A
R expansion L Contraction
C of E of
H S
Monetary policy Monetary policy
A
S
E
S
0
20000
40000
60000
80000
100000
120000
6
9
1 -9
7
7
9
1 -9
8
8
9
1 -9
9
9
1 -0
0
0
2 -0
1
1
0
2 -0
2
0
2 -0
3
3
0
2 -0
4
4
0
2 -0
5
5
0
2 -0
6
6
0
2 -0
7
7
0
2 -0
8
OMO PURCHASES
8
0
2 -0
9
OM O…
10
12
14
16
0
2
4
6
8
6
9
1 -9
7
8
9
1 -9
9
0
2 -0
1
INT
R E
0
2 -0
3
STR
4
0
2 -0
5
ATE
S
6
0
2 -0
7
8
0
2 -0
9
RATES
INTREST
BANK RATE
Bank rate is the minimum rate at which the central bank
provides loans to Commercial banks
When the general bank raises the bank rate, the commercial
bank raises their lending rates, it results in less borrowing and
Reduces money supply in the economy
PRE REFORM
BANKRATE
12
10 10 10 10 10 10
9 9 9
8
7.5
6 6 6
BANK RATE
4
2
0
1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990
POST REFORM
BANKRATE
14
12 12 12 12 12 12
10
8 8 8 7.5
6 6 6 6 6 6 6
BANKRATE
4
2
0
INTREST RATE WITH EFFECT OF BANK RATE
16
15
14 14
13 12.5 12.25
12.25
12 12 12 12 12 11.5 12
11 10.75
10.75
10
8 8 8 7.5
6 6 6 6 6 6 6 6 6 INTREST RATES
4 BANK RATE
2
0
REPO & REVERSE REPO
RATE
REPO RATE:
This is the rate at which the central bank funds to the monetary
Market
The rate at which central bank borrows funds from the commercial banks
0
1
2
3
4
5
6
7
8
9
r
a
M -0
4
4.5
l -0
Ju 4
v
o
N -0
4
r
a
M -0
5
5
l -0
Ju 5 6
v
o
N -0
5
r
a
M -0
6
5.5
6.5
l -0
Ju 6
v
o
N -0
6
6
r
a
M -0
7
7.25
l -0
Ju 7
v
o
N -0
7
r
a
M -0
8
6
l -0
Ju 8
v
o
N -0
8
6
7.75 8
r
a
M -0
9
6.5
5.5
3.25
5 4.75
Repo rate
REVERSE REPO AND REPO RATE
Reverse repo
BANK % REVERSE % REPO % CRR % SL %
RATE change REPO change RATE change change R change
Mar- 6 4.5 6 4.5 25
04
Oct-04 6 0 4.5 0.00% 6 0.00% 5 11.11% 25 0.00%
Apr-05 6 0 5 11.11% 6 0.00% 5 0.00% 25 0.00%
Jan-06 6 0 5.5 10.00% 6.5 8.33% 5 0.00% 25 0.00%
Jul-06 6 0 6 9.09% 7 7.69% 5 0.00% 25 0.00%
Jan-07 6 0 6 0.00% 7.25 3.57% 5.5 10.00% 25 0.00%
Mar- 6 0 6 0.00% 7.75 6.90% 6 9.09% 25 0.00%
07
Apr-07 6 0 6 0.00% 7.75 0.00% 6.5 8.33% 25 0.00%
Apr-08 6 0 6 0.00% 7.75 0.00% 7.75 19.23% 25 0.00%
May- 6 0 6 0.00% 7.75 0.00% 8.25 6.45% 25 0.00%
08
Jun-08 6 0 6 0.00% 8.5 9.68% 8.25 0.00% 25 0.00%
Oct-08 6 0 6 0.00% 8 -5.88% 6 -27.27% 25 0.00%
Dec- 6 0 5 -16.67% 6.5 -18.75% 5.5 -8.33% 24 -4.00%
08
Jan-09 6 0 4 -20.00% 5.5 -15.38% 5.5 0.00% 24 0.00%
Apr-09 6 0 3.25 -18.75% 4.75 -13.64% 5 -9.09% 24 0.00%
Feb-10 6 0 3.25 0.00% 4.75 0.00% 5.75 15.00% 25 4.17%
QUALITATIVE
INSTRUMENTS
Selective credit control
Rationing of credit
Moral persuasion
Direct action
THANK YOU