monetary policy(2)

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RESERVE BANK OF INDIA:

RESERVE BANK OF INDIA

RBI:

RBI RBI was established on April 1,1935, in accordance with the provisions of the reserve bank of india,1934. RBI governor is Dr. subbarao . Office- Mumbai. Once privatized ,RBI became government owned bank in 1949.

WHAT IS RBI:

WHAT IS RBI "...to regulate the issue of Bank Notes and keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage."

RBI CENTRAL BOARD:

RBI CENTRAL BOARD RBI governed by the central board of director. official director: One governor and 4 are deputy governor. Non official director: ten Directors from various fields and one government Official Others: four Directors - one each from four local boards Functions : General superintendence and direction of the Bank's affairs

OBJECTIVES:

OBJECTIVES maintaining price stability ensuring adequate flow of credit to productive sectors. Monetary Authority: � Issuer of Currency � Banker and Debt Manager to Government � Banker to Banks � Regulator of the Banking System � Manager of Foreign Exchange � Regulator and Supervisor of the Payment and Settlement Systems � Developmental Role Research , Data and Knowledge Sharing:

RBI’S REGION:

RBI’S REGION MUMBAI NEW DELHI CHENNAI KOLKATA REPRESENT THE FOUR REGION OG THE COUNTRY 26 Regional Offices and Branches

RBI:

RBI � Monetary Authority � Issuer of Currency � Banker and Debt Manager to Government � Banker to Banks � Regulator of the Banking System � Manager of Foreign Exchange � Regulator and Supervisor of the Payment and Settlement Systems � Developmental Role MONETARY POLICY � Maintaining price stability � Ensuring adequate flow of credit to the productive sectors of the economy to support economic growth � Financial stability

RBI APPROACH:

RBI APPROACH we monitor and analyze the movement of a number of indicators including interest rates , inflation rate, money supply , credit , exchange rate , trade, capital flows and fiscal position, along with trends in output as we develop our policy perspectives.

MAIN ACTIVITIES:

MAIN ACTIVITIES Cash Reserve Ratio ( CRR) Statutory Liquidity Ratio ( SLR) � Refinance facilities � Liquidity Adjustment Facility (LAF): � Open Market Operations ( OMO) � Market Stabilization Scheme (MSS): � Repo/reverse repo rate: � Bank rate Cash Reserve Ratio

CURRENCY IN INDIA:

CURRENCY IN INDIA Denominations of coins and notes in circulation: � Coins in circulation: 25 paise , 50 paise , 1, 2, 5 and 10 Rupee � Notes in circulation: Rs. 5, 10, 20, 50,100, 500 and 1000

MONETARY POLICY:

MONETARY POLICY

PowerPoint Presentation:

Monetary policy is a policy statement through which the central bank(RBI) targets key sector of indicators to ensure price stability in the economy. These indicators includes. Money supply(m3) Inflation Interest rate MONETARY POLICY announced twice in the year first in April and second in October .

IMPACT OF MONETRAY POLICY :

IMPACT OF MONETRAY POLICY

PowerPoint Presentation:

EXTENT OF MONEY EXTENT OF MONEY The central measures the extent of money and credit available in the economy using the indices like m0,m1,m2,m3. Bank credits, governments currency liability to public, net foreign exchange reserves of banks. Expansion of money policy Money supply in the economy will be increased by RBI through issue of currency, budgetary operations and borrowings by governments from foreign countries Growth in money supply more than the growth in real national income. If money supply is exorbitantly more ill results in economy.

OBJECTIVES :

OBJECTIVES

TOOLS OF THE MONETARY POLICY :

TOOLS OF THE MONETARY POLICY

TOOLS :

TOOLS BANK RATE The rate at which RBI lends money to others bank. During inflation time RBI will increase the bank rate. This will affects the borrower. During the period of falling prices this rate will be reduced.

:

In terms of RBI guidelines, Banks in India have switched to Base Rate system from Benchmark Prime Lending Rate (BPLR) system from July 01, 2010. Following is the updated list- PUBLIC SECTOR BANKS

PRIVATE SECTOR BANKS :

PRIVATE SECTOR BANKS

CASH RESERVE RATIO:

CASH RESERVE RATIO CASH RESERVE RATIO All commercial banks have to keep certain percentage of demand and time deposit with RBI. During inflation time RBI will increase the CRR. This will reduce the fund available for issuing credit. During the period of falling prices this rate will be reduced.

SLR:

SLR All commercial bank in addition to CRR have to keep certain percentage of demand and time deposits with RBI in the form of liquid assets cash, gold or approved securities. it will be increase to reduce the money supply and vice versa. SLR present rate is 24%.

PowerPoint Presentation:

KEY RATE NOV 2 ND 2010 JAN 25 TH 2011 MAR 17 TH 2011 CRR 6 6 6 REPO RATE 6.25 6.50 6.75 REVERSE REPO 5.25 5.50 5.75 BANK RATE 6 6 6 CRR AND INTEREST RATES PERCENTAGE PER ANNUM

FISCAL POLICY:

FISCAL POLICY Fiscal policy is the policy of government concerned with raising of revenue through taxation and other means and deciding on the level and pattern of expenditure. objectives To accelerate rate of investment. Achieving rapid economic development. Achieving full employment. Promoting foreign trade. Establishing welfare trade. Fiscal policy operated through budget.

INSTRUMENT OF FISCAL POLICY:

INSTRUMENT OF FISCAL POLICY

DIRECT TAX:

DIRECT TAX

INDIRECT TAX:

INDIRECT TAX

PUBLIC EXPENDITURE:

PUBLIC EXPENDITURE RISE IN PUBLIC EXPENDITURE WILL INCREASE THE STANDARD OF LIVING PUBLIC EXPENDITURE IS DONE THROUGH BUDGET THE GOVERNMENT WILL MAKE FOLLOWING CHANGES ON PUBLIC EXPENDITURE SIZE OF PUBLIC EXPENDITURE COMBINATION OF PUBLIC EXPENDITURE DIRECTION OF PUBLIC EXPENDITURE

BUDGET:

BUDGET BUDGET MEANS AN ESTIMATE OF REVENUE AND EXPENDITURE. IMPORTANCE IN INDIA,THE TOTAL BUDGETARY EXPENDITURE OF BOTH CENTRE AND STATE IS 50% OF GDP. IT ACCELERATES ECONOMIC DEVELOPMENT IMPROVES PRODUCTION IN PRIVATE SECTOR IMPROVE INCOME DISTRIBUTION PROMOTE EXPORT AND IMPORT DISTRIBUTION

BUDGET:

BUDGET UNION BUDGET MAKE BY THE CENTRAL GOVERNMENT IMPORTANT ASPECTS OF 2011-12 BUDGET Income-tax exemption limit raised to increase the exemption limit of Income tax liability from 1.6 lakhs to 1.8 lakhs . This measure has assured a saving of at least Rs. 2000 to every tax payer in this slab. Defence budget hiked to Rs 1.54 lakh crore The Finance Minister announced that the Defence sector will get more than 1.64 trillion (1.64 lakh crore rupees) for defense budget. It's an increase of more than 4% from last year. Excise duty on 130 new items Pranab Mukherjee announced 1% Excise duty on 130 new items. These items exclude food products clothes and daily utilities. Besides this, the base rate on excise duty has also been STATE BUDGET MAKE BY THE STATE GOVERNMENT

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