November 2007

l11 1| M11|lI 1||||

MONEY KUMAR
l|uauc|a| Educal|ou Se||es
www.rbi.org.in
l've gol a g|eal job. Bul peop|e dou'l |uow much aboul whal l do. Nosl lh|u|
aboul lhe RBl as a gove|umeul o|gau|/al|ou lhal's gol uolh|ug lo do w|lh lhem.
Bul lhal's uol how|l |s. Eve|y s|ug|e lh|ug lhal l do al lhe RBl has au |mpacl ou lhe
eul||e couul|y. l|omlhe poo|esl la|me| lo lhe ||chesl bus|uessmau. As you cau
guess, |l's a ve|y |ule|esl|ug job w|lh mauy |espous|b|||l|es. ll you waul lo |uow
mo|e, jusl s|l bac|, |ead aud eujoy!
Learn|ng abouI The NoneIary Po||cyI
h|, I'm Noney kumar.
And I Wor| aI Ihe
eserve 8an| oI Ind|a.
The 8I, you |noWI

. H: t|s
!:!|:
s
:
. l l HA
l
:
s
:
|
:

|
s
|
|
!
|

.

:
a
8
|
. !:|:t l!s |ss| :s:
: |
In o cIoss, fhe sfudenfs fry hord
fo undersfond.
WeIcome, Money Iumorl
I hove invifed you fo
expIoin fhe Monefory poIicy
fo my cIoss.
Hi everybodyl
AII of fhis is so compIic fed.

o
Why conf we jusf hove
enough mo ey oround for
n
veryone on oII wouId be finel
e
d

Oh nol Mo woyl
Why nof7
Whof's your
probIem7
AIrighfl AIrighfl So you
fhink if fhere is
enough money oround, if
wouId be jusf fine7
I hove o surprise for you
fodoy. PIeose weIcome
Money Iumorl
Ive foId fhem obouf
fhe 3 bosic objecfives
of monefory poIicy
- confroIIing infIofion,
encouroging growfh
& finoncioI sfobiIifyl
,Lefs go for cIoss frip fhenl
He roIIs his hond round in o whirI
ond fhey reoch o whoIe new worIdl
WeI o e fo o
c m
wo Id where
r
fh r is e e
m ney o
e erywhe e
v
r .
T ke os much o
o
s
y u wo ond do
o nf
whof ver u
e yo
won fh if.
f wi
o feII me, how
S

m ch m ne
u o y
wo Id you need
u
7
b00 rupeesl
WeII buy
everyfhing we
wonfl
Donel
The sfudenfs enjoy fheir money
0 Ps,1 / Z00 Ps, / Ps,300/
The kids queue up fo pIoy gomes. Af Ps. I00 o gome,
ifs very offordobIel
Ps, 100/
8uf sIowIy, mony ofher kids join fhe queue.
And os fhe demond rises, fhe price does foo...
Some con sfiII offord if. 8uf mosf conf.
Whofs fhe poinf of
hoving money when
we connof do whof
we wonf7
Yes, why conf fhey hove
more consoIes,
so fhof oII of us con
pIoy7
8uf whof obouf fhe
spoce7 There is
hordIy ony spoce in fhis
room for oII
of us fo sfond, where
wiII fhey keep
more consoIes onywoy7
Money Iumorlll
Money Iumorlll
Money Iumorlll
Why is if fhof in spife of hoving
I ods of money, w co nof offord
o
e n
o o whof we wonf7 Why ore fhere
f d
nof enou h fh g o oiIobIe7
g in s v
Thofs whof hoppens when
fhere is o Iof of money
buf fewer goods.
Ifs coIIed InfIutionl
InfIofionl7
When foo much money
choses foo few goods,
fhe prices of goods
increose.
Thofs infIofion. Though
if hurfs everybody oIike,
if hurfs fhe poor fhe mosf.
Why's fhof7
8ecouse, poor peopIe
ore nof profecfed.
They eorn fheir doiIy
IiveIihood ond
connof sove enough for
o roiny doy.
Of course I conl
Come, I wiII show
you somefhingl
Con you nof do
onyfhing obouf if7
Money Iumor orrives in o fIoshl
This is whof we of fhe P8I dol
He fokes fhem fo his confroI room of fhe P8I heodquorfers.
Wifh fhe increose in fhe inferesf rofes, fhe
screen shows rupee fIow from bonks fo fhe
morkef sIowing down os money becomes more
expensive ond peopIe reduce borrowing from bonks.
He fhen oIso odjusfs fhe ofher sIider so
fhof fhe excess money from fhe morkef
gefs sucked bock info his mochine.
Ps. I00
The screen now shows fhe video-gome porIour.
The Iine for fhe video-gome consoIe sIowIy comes down
ond so do fhe fickef prices.
The P8I connof sfop fhe
price increoses compIefeIy.
8uf if con ensure fhof
prices do nof move up or
down ropidIy.
This woy fhere is enough
fime for peopIe fo odjusf
ond sove enough fo foke
core of fheir fufure.
As he pushes up
fhe inferesf rofes...
If con oIso increose or
decreose fhe
price of money, fhof is,
inferesf rofes fo
confroI fhe
money ovoiIobIe fo
peopIe
for spending.
Does if sfiII sound foo compIicofed7
Mo Money Iumor. We
now undersfond price sfobiIify.
8ock in fhe cIossroom.
So, whof did you gef
wifh unIimifed money7
UnIimifed froubIelll
...ond everybody bursfs ouf Ioughinglll
f i If moin o ns
Price StubiIity
by confroIIing fhe money
ovoiIobIe fo peopIe. If con
confroI money by eifher
g m providin more oney or
foking owoy excess
on y m e from fhe bonks.
So you ensure price sfobiIify7
How's fhof7
You wonf fo see,7
Enfer fhis worId where
youII be in chorge.
CoII me if fheres froubIe.
He roIIs his hond in o whirI ond
fhey're fronsporfed fo o new worId.
Af P8I's confroI room.
Yesl And by doing
if, I ensure
fhof
fhe nofions
growfh hos o
sfeody momenfum.
Sfeody
momenfum7l Why7
Whofs
your probIem if
Indio grows by
Ieops ond bounds7
I don'f hove o
probIem. 8uf
if growfh is nof
sfeody, if con
hove
severe
consequences.
Lefs encouroge
more growth,
TeII oII componies
fo increose
producfion
ond increose fhe
income of oII
peopIe.
They swifch on o buffon ond corporofe heods ore seen on screen.
8uf weII
need more
resources fo
do fhofl
Toke os mony boxes of
resources os you wonf.
As per fheir insfrucfions, workers
foke owoy os mony boxes of resources os fhey Iike.
Wifh more resources,
focfories produce goods in obundonce
Shops ore fuII of goods ond
peopIe hove Iofs of money fo buy fhem.
Affenfion
Iodies ond
genfIemenl Wed
Iike fhe counfry
fo grow.
So pIeose fry
fo increose
your producfion.

S
k
r
o
k
tin
g
G
r
o
w
h
!
y
-
c
e
t
H
g
e
m
p
o
m
e
n
r
te
s
!
i
h
l
y
t
a
As fhe sfudenfs ceIebrofe fheir success...
...oIorms inferrupf fhem. They furn fo
fhe moin screen fo see whof if isl
Pesources reoch o Iimif, producfion
connof go up onymore.
More empIoymenf hos meonf more
spending. And fhe higher demond hos coused
infIofion. Mow, peopIe connof buy goods
even wifh bogfuIs of moneyl
Money Iumor is sforfing fo gef worried...
buf he woifs fo see if fhe sfudenfs coII him.
Since goods oren'f geffing soId, focfories reduce fheir
producfion ond Ioy off workers.
More unempIoymenf meons even Iesser soIes...
...focfories ore forced fo shuf down.
The economy enfers o period of recession
from where if wouId foke o Iong fime fo recover.
Things go from bod fo worse. PeopIe
who con'f buy fhings ore now riofing ond Ioofing.
The sifuofion is ouf of confroIl
PLUMMETINS SPOWTH||
HISH UNEMPLOYMENT|||
The sfudenfs decide fhey shouId coII Money Iumor.
Tsk, fsk, fsk ,.Iooks Iike youve
creofed Ioods of froubIe.
Im sure you con
do somefhing obouf if.
Money Iumorlll
Im ofroid I conf
fix fhings quickIy.
IfII foke some
fime for fhe
economy
fo come bock fo
where if wos. 8uf
fhe domoge fhof if
wouId do in fhe
meonwhiIe,Thonk
0od fhis is nof
fhe reoI worIdlll
Lefs go bock fo
fhe reoI worId
where P8I keeps o
cIose wofch
on everyfhingl
You see, of fhe P8I, we do o Iof of fhings.
You mighf nof deoI direcfIy wifh us.
8uf were oIwoys deoIing wifh you. AIwoysl
Our poIicies offecf neorIy every ospecf
of your Iife. Even fhough peopIe generoIIy
donf reoIise if. I do hope fhof you'II now
oppreciofe fhe roIe of P8I.
So Money Iumor fokes fhem bock fo fhe reoI worId.
Mow, I'II expIoin fhe
fhird piIIor of
monefory poIicy -
finoncioI sfobiIify.
8uf fhof doesnf concern fhe common mon.
Im sure ifs nof fhof imporfonf.
WeII,you go on o picnic ond
Ief me foke o vocofion foo.
Yeoh surel Lefs see o worId where
youre on vocofion.
Money Iumor gives fhem o bogfuI
of money ond fronsporfs fhem fo onofher worId.
Yesl
0reofl
Hmnn......
so you
wonf fo go
for o
picnic,
isnf if7
Money Iumor,
why don'f you expIoin7
PohuI, Tino ond Arun ore hoppy fo be
in fheir dreom worId wifh o bogfuI of moneyl
This is foo heovy. I
fhink I'm
going fo Ieove if
wifh o bonk.
So Tino deposifs her money in o bonk.
MeonwhiIe, PohuI eyes o beoufifuI moped.
He wonfs fo buy if, buf is shorf of money.
So he heods fo fhe bonk.
I'd Iike fo borrow some money
for o moped.
The bonk monoger gives
Tino's money fo PohuI....
He uses fhe money fo buy fhe moped.
A week Iofer...
So Tino goes bock for her money.
I'd Iike fo wifhdrow
my money.
8uf Ive given your
money fo someone
eIse. I donf hove ony...
Tino is disoppoinfedl
Herel Poy if bock
wifh inferesf.
Heyl Mice
moped
PohuIl
Yeohl You
shouId buy
one fool
...And Money Iumor,
who usuoIIy
suppIies money
when we run ouf
of if, is on
vocofion.
How wiII I educofe
my chiIdren now7
PeopIe who hod come fo deposif ore discouroged.
Tino feeIs heIpIess.
MeonwhiIe...
Yeoh Arunl You
shouId buy one foo.
Heyl 0reof Mopedll
Id deposifed oII
my Iife sovings
in fhis bonk.
Mow Im nof
geffing my
money bock.
And she's nof oIone...
If I do nof gef
my sovings bock,
how wiII I gef my
wifes
operofion done7
The bonk hos been
foiIing fo recover
fhe Ioons mode by
fhe bonk monoger.
Why shouId I keep
my money here7
Even I mighf Iose ifl
Arun opprooches onofher bonk for o Ioon.
I'd Iike fo borrow
some money fo
buy o mopedl
Arun is disoppoinfed.
And he's nof fhe onIy one who didn'f gef o Ioon.
I need money fo
buy o house.
How wiII I buy if now7
How om I going fo
morry my doughfer7
Amidsf fhe furmoiI PohuI, Tino ond
Arun meef eoch ofher.
Money Iumorlll
OnIy Money Iumor
con soIve fhis.
I',m sorryl We don'f hove
money. My borrowers hoven'f
refurned fhe money
I expecfed. And Money Iumor
who provides if during such o
sifuofion is on vocofion.
He fokes fhem fo fhe confroI room.
He presses o buffon coIIed "CupituI"
ond money fIows from P8I fo fhe bonks.
PIeose work on .........Pisk ussessment....
.....prudentiuI norms...... cupituI udequucy...
..... Pecover non performing Iouns,...
Sure, I conl
Looks Iike my
vocofion hos
hod severe
consequences.
Money Iumor. I
donf undersfond
whofs hoppening.
Whof hoppened fo
fhe bonks7 Isnf
fhere
somefhing you con
do obouf if7
7
7
7
Then he mokes some imporfonf coIIs.
And sIowIy, fhe bonks become heoIfhy ogoin.
Cusfomers fhrong fhe bonks. Some deposif. Ofhers borrow.
Money Iumor fhen exfends o big profecfive umbreIIo
coIIed deposif insuronce over fhe bonks.
DEPOSIT INSUPANCE DEPOSIT INSUPANCE
The bonk monoger nods in ogreemenf.
0reofl So.... whofs nexf7
FinoIIy, fhings gef bock fo normoI.
You see, unIess bonks ore sofe,
peopIe donf keep fheir money
fhere. And if fhof hoppens,
bonks hove no money
fo give fo ofher peopIe fo
produce goods. If fhof hoppens,
how wiII fhe economy run,
Ief oside grow7 So, I hove fo
be fhere behind
fhe scene ond ensure
fhof bonks funcfion weII.
Oh, we undersfondl
8y ensuring fhof
bonks funcfion weII, you heIp
fo foke money from fhose
who hove more ond
give fo fhose who need if.
When fhey refurn fhe money,
someone eIse con
foke if ond so on,
PreciseIy. This con
hoppen onIy if
peopIe frusf bonks
wifh fheir money.
So fhofs finunciuI
stubiIity for you.
The Rese|ve Bau| ol lud|a was eslab||shed ou Ap||| 1, 1985 as pe| lhe
Rese|ve Bau| ol lud|a Acl, 1984. The Ceul|a| 0ll|ce was |u|l|a||y |u Ca|culla,
bul was pe|maueul|y moved lo Numba| |u 1987. Though o||g|ua||y p||vale|y
owued, |l has beeu lu||y owued by lhe ove|umeul ol lud|a s|uce |l was
ual|oua||sed |u 1949.
8I IacI-I||eI
Copyright
Reproduction is permitted provided the source is acknowledged.
DiscIaimer
Financial education initiatives of the Reserve Bank of ndia are for providing general information and guidance to the
common person. Users of this information may exercise their own care and judgement while using the information
provided here.