MONETARY POLICY Flashcards
WHAT IS MONETARY POLICY ?
WHEN WAS NEW MONETARY POLICY FRAMEWORK SIGNED BETWEEN GOVT OF INDIA & RBI
2015
WHAT IS THE INFLATION TARGET FOR MONETARY POLICY
WHAT IS INFLATION IN CONTEXT OF MONETARY POLICY
WHO PUBLISHES CPI (COMBINED)
- MINISTRY OF STATISTICS & PROGRAM IMPLEMENTATION
- NSO
WHO DECIDES INFLATION TARGET
WHEN WE CAN SAY THAT RBI HAD FAILED THE INFLATION TARGETS ?
INFLATION ABOVE 6%
WHO DECIDES THE REPO RATE ??
MPC
IS IT MANDATORY TO MPC TO MEET 6 TIMES A YEAR ??
4 TIMES IS MANDATORY BUT MPC IS MEETING BI MONTHLY NOW DAYS
TELL ME ABOUT THE MEMBERSHIP OF MPC
RBI GOVERNOR CANNOT VOTE IN FIRST INSTANCE IN MPC
- FALSE, HE CAN VOTE IN FIRST INSTANCE
- HE ALSO GETS SECOND VOTE WHICH IS CASTING VOTE IN CASE OF TIE
DECISION OF MPC IS BINDING ON RBI ???
YES
MPC ALSO HAS AUTHORITY ON REVERSE REPO RATE, CRR, SLR ??
IT ONLY HAS AUTHORITY ON REPO RATE
RUPEE PRICE FLUCTUATION IS ALSO A FACTOR KEPT IN MIND BY THE MPC ?
GIVE ME THE LIST OF 10 TOOLS OF MONETARY POLICY
- REPO
- REVERSE REPO
- SDF (STANDING DEPOIST FACILITY)
- MSF
- BANK RATE
- LAF - (LTRO)
- LAF CORRIDOR
- FRACTIONAL RESERVE BANKING (CRR,SLR)
- OMO
- MSS - STERILIZATION
WHAT IS ANOTHER NAME OF REPO RATE
POLICY RATE
WHAT IS THE LIMIT OF INTEREST RATE IN REPO
0.25% OF NDTL
FULL FORM OF REPO
REPO CAN BE RETUREND IN 14 DAYS
NO, IT MUST BE RETURNED OVERNIGHT
WHAT IS RBI DOING IN REVERSE REPO?
BANKS CAN DEPOSIT UNLIMITED AMOUNT IN REVERSE REPO
YES FOR NOW, BUT RBI HAS POWER TO PUT CAP ALSO
WHAT IS THE MAJOR DIFFERENCE BETWEEN SDF & REVERSE REPO
- NO COLLATERAL NEEDED AS COMPARED TO REVERSE REPO
- AVAILABLE ALL TIME, NOT JUST ONLY ON THE DISCRETION OF RBI
WHAT IS SDF?
IS SDF IS FOR OVERNIGHT ?
YES, BUT CAN BE INCREASED IN FUTURE
WHAT IS MSF ?
IN WHAT WAY SLR IS RELATED TO MSF ?
MSF ENABLES SCHEDULED COMMERCIAL BANKS TO TAKE
KEY DIFFERENCE BETWEEN MSF & REPO RATE
BANK RATE IS MOST ACTIVE TOOL OF MONETARY MANAGEMENT
WHAT IS THE PURPOSE OF LAF
WHAT IS TERM REPO ?
ADVANTAGES OF TERM REPO?
WHAT IS LTRO
EXPLAIN THE AUCTION SYSTEM IN LTRO
IS THEIR ANY LONG TERM FOR REVERSE REPO
YES
WHAT IS TARGETED LTRO (TLTRO)
WHAT IS LAF CORRIDOR
GIVE 2 TYPES OF RESERVE BANKING ?
FRACTIONAL RESERVE BANKING
CRR, SLR
WHAT IS CRR
TIME OF CRR
FORTNIGHTLY BASIS
IS THEIR ANY CELING RATE IN CRR ?
NO
WHAT IS SLR ?
AMOUNT BANK REQUIRES TO MAINTAIN WITH THEMSELVES ON DAILY BASIS
WHAT IS THE TIME BASIS OF SLR
DAILY BASIS
CAN EXCESS CRR BE TREATED AS SLR LIUID ASSET ?
YES
WHAT IS THE CELING RATE OF SLR ?
40%
CAN SLR BE MAINTAINED AS CASH BALANCE WITH RBI ?
YES IT CAN
WHAT IS THE LOGIC BEHIND CRR, SLR
NON SCHEDULED BANKS ARE NOT REQUIRED TO MAKE CRR & SLR DEPOSIT
FALSE
IS THE SAME RBI ACT GOVENING CRR FOR BOTH SCHEDULE & NON SCHEDULE BANKS
NO
IS SLR FOR BOTH SCHEDULED & NON SCHEDULED BANK IS DERIVED FROM SAME ACT
YES, BANKING REGULATION ACT 1949
WHAT IS OPEN MARKET ?
SECONDARY MARKET
WHA TIS OPEN MARKET OPERATION
WHAT IS RBI GONNA DO IN OMO WHEN THEY WANT TO INCREASE THE MONEY SUPPLY
BUY MORE G SEC
EXPLAIN ME THE 2 TYPES OF OMO
WHY INFLATION HAPPENS WITH INCOMING FOREGIN INVESTMENT
WHY RBI NEED TO DO STERILISATION/ MARKET STABLISATION SCHEME (MSS)
IS THEIR ANY INTEREST PAYMENT WHEN INSTITUTION BUYS MARKET SATBLISATION BOND
WHAT ARE THE 2 STANCES OF MONETARY POLICY
