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RBI - Coggle Diagram
RBI
Functions
Custodian of forex reserves
Foreign exchange management
supervisor of payments system
Means of fund transfer
National Electronic Fund Transfer (NEFT)
Net Transaction
Real Time Gross Settlements (RTGS)
Cheque, Draft, postal order
Immediate payment systems
Card payment system
Recommendations
Payments Regualtory Board (PRB)
Subash chandra garg (2018)
Independent PRB outside RBI
Ratan Watel
Independent PRB within RBI
Represent GOI in international financial institution
supervisor of banks
Publication of monetary data
Banker's bank
Development role
Govt bank
Regulator of currency and credit
Currency authority
Monetary policy
regulates money supply
Objectives
Exchange rate stability
Financial sector stability
Increase economic growth
Employment generation
Price stability
Monetary policy dilemma
Monetary policy measures
Quantitative measures
Open market operation (OMO)
RBI sell & purchases g.sec
Bank rate
IR at which RBI lends to commercial banks
SLR
Specified liquid assets
G sec
Gold
cash
Objectives
Maintain adequate liquidity
compel banks to lend to govt
Secondary market for G.sec
credit control
Liquidity Adjustment Facility (LAF)
Repo
Repo rate
Reverse Repo
Reverse repo rate
CRR
Objectives
protect the interest of the depositors
credit control
Market Stabilization Scheme (MSS)
Marginal Standing Facility (MSF)
Qualitative measure
Differential rate of interest
Differential lending norms
Margin requirement
Ceiling on credit
Credit rationing
PSL policy
PSL certificate
Other measures
Moral suasion
Direct action
Unconventional MP measures
Special OMO
LTRO
Rupee-dollar swap
TLTRO
Quantitative easing
not used in developing countries
Types
contractionary
reduce MS
Expansionary
increase MS
MP reforms
MPC
Scope
Earlier scenario
Compositon
Objectives
MP framework
Features
MPC - policy Rate
RBI - MP report half-yearly & forecast for 6-18 months
Every 5 years IT to be fixed by govt
If 3Q, RBI failed, RBI failed in IT
FIT
If failed to achieve IT RBI has to submit the report
Inflation Targeting Policy
Urjit patel committee
CPI 2 - 6%
Fiscal Deficit not more than 3%
FIT
Introduce long term repo transaction
WPI - CPI
MP bi-monthly review
MP formulated by 7 member MPC
Standing Deposit Facility
Two committees that recommended MPC
Urjit patel committee (2013)
RBI-5
Veto power to RBI governor
Srikrishna committee (2014)
RBI-3, Govt-4
No veto power
Issues
Autonomy of RBI
Semi-autonomous
Goal
decided by the govt
Instrument
RBI works to achieve govt aims using its instruments
sec 7
Issues
PCA
Transfer of RBI reserves to govt
pros & cons
Reserves of RBI
Types
Realised eqity
CF
ADF
Unrealised equity
IRA
FCFCVA
CGRA
Tussle for release of reserves
govt - cited the world avergage
RBI - YH Malegam (2013)
Govt set up ECF
CRB or relalised equity
maintain CRB rest transfer to govt
TR - 20 - 24.5%
CRB - 5.5 - 6.5 %
unrealised reserves should not transferred to govt
classified into two categories
CAB or realised equity
unrealised equity
In case of shortfall CRB - unrealised equity but not vice versa
FY shifted from june july to april- march
All the recommendations was accepted
Pros & cons