Pdf a study of impact of rbi policy rates on inflation. What are the main functions of reserve bank of india. It is the duty of the rbi to control the credit through the crr, repo rate and. Important methods adapted by rbi to control credit creation. Rbi from time to time had adopted the following qualitative methods of credit control. The reserve bank of india rbi is indias central bank, which controls the issue and supply of. Rbi measures to expand bank credit, boost liquidity. Quantitative control to regulates the volume of total credit. The following points highlight the three important methods to control the credits. May 6, 2010 the government through the reserve bank of india employs the monetary policy as an instrument of achieving the objectives of general economic policy.
The bank rate is the rate at which the central bank of a country is prepared to rediscount the first class securities. Quantitative arate of bank interest bopen market operation cvariable reserve ratio 2. It is one of the important function of rbi for controlling supply of money or credit. Rbi news, rbi announcements, reserve bank of india rates. The new wave ushered in a modern outlook and techsavvy methods of working.
These methods are quantitative and qualitative techniques to control and regulate the credit flow in the country. Qualitative afixation of margin bregularisation of consumer credit c control of. Reserve bank of india rbi, the monetary authority of india was established in. The reserve bank of india rbi has announced the second set of measures to preserve. Pallavi ingale introduction the reserve bank of india rbi is the indian central bank.
A study of impact of rbi policy rates on inflation prof. The bank rate is the minimum official rate at which the central bank rediscounts first class bills brought by. Under the selective or qualitative credit control methods, the rbi encourages flow of credit only to certain types of industries and discourages the use of bank credit for certain other purposes. It is the rate of interest at which central bank lends funds to commercial banks. Selective or qualitative credit control measures of rbi. Credit control in the economy is required for the smooth functioning of the economy. Quantitative and qualitative methods of credit control. The following points highlight the two categories of methods of credit control by central bank. Credit control by rbi central bank objectives, tools, importance credit control is an important tool of the monetary policy used by reserve bank of india central bank to control the demand and supply of money and flow of credit in an economy. The various methods employed by the rbi to control credit creation power of the commercial banks can be classified in two groups, viz. Mega merger of staterun banks comes into force from april 1, says rbi. What are rbis qualitative and quantitative instruments of. There are 2 types of methods employed by the rbi to control credit creation.
Rbi uses methods like onsite inspections, offsite surveillance, scrutiny. Some of the methods employed by the rbi to control credit creation are. The preamble of the rbi speaks about the basic functions of the bank. Download as docx, pdf, txt or read online from scribd. The following are the quantitative methods of credit control. Credit control is most important function of reserve bank of india.
Commercial bank in the country creates credit according to. The central bank rbi controls the quantity of credit given by commercial banks by using the following methods. After the merger of the oriental bank of commerce obc and the united bank of. There are two methods that the rbi uses to control the money supply in the economy. Later on, in the year 1993, the government merged new bank. What are rbis qualitative and quantitative instruments of credit control.
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