to keep liquidity in financial markets
unlimited is controlled mainly by amount of money RBI wants to be there in market. gold standard is gone. money is printed by taking in account of supply and inflation.
The Reserve Bank of India (RBI) controls the money market primarily through monetary policy tools such as the repo rate, reverse repo rate, and cash reserve ratio (CRR). By adjusting the repo rate, the RBI influences the cost of borrowing for banks, which in turn affects lending rates and liquidity in the economy. Additionally, the RBI conducts open market operations to buy or sell government securities, thereby managing the money supply. These measures help stabilize inflation and ensure sufficient liquidity in the financial system.
government securities
RBI
The Reserve Bank of India (RBI) plays a crucial role in the foreign exchange (forex) market by regulating and managing the country's forex reserves, ensuring stability in the currency exchange rates. It formulates and implements policies related to foreign exchange under the Foreign Exchange Management Act (FEMA), 1999. Additionally, the RBI acts as the custodian of India's foreign exchange reserves, intervenes in the forex market to curb excessive volatility, and facilitates external trade and payments. Through these actions, the RBI aims to maintain the overall stability of the Indian economy.
unlimited is controlled mainly by amount of money RBI wants to be there in market. gold standard is gone. money is printed by taking in account of supply and inflation.
Because of the existence of Unorganized sector. This sector remains outside the purview of the RBI even today. It makes the money market an under developed one.
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explain in detail rbi's measures of money supply
Banks play a vital role to keep the flow of money in the economy in a controlled manner following the guidelines of RBI.
who control money
rbi
government securities
RBI
The Reserve Bank of India (RBI) controls the money market primarily through monetary policy tools such as the repo rate, reverse repo rate, and cash reserve ratio (CRR). By adjusting the repo rate, the RBI influences the cost of borrowing for banks, which in turn affects lending rates and liquidity in the economy. Additionally, the RBI conducts open market operations to buy or sell government securities, thereby managing the money supply. These measures help stabilize inflation and ensure sufficient liquidity in the financial system.
control the CLR rate
Banks may not have all the money they need for their day to day operations. In such cases where they have a deficit, they borrow money from RBI. For example, during festival seasons bank customers may withdraw more money than usual. So, at such times they may borrow extra money from RBI to meet their sudden withdrawal demands.