RBI SCHEDULE Banks Non Schedule Banks

State Cooperative


Indian Banks

Foreign Banks

PSU Banks

Pvt Sector

SBI & its Subsidiaries

Other Nationalized Banks

Regional & Rural Banks


It is an apex institution of the monetary and banking structure of a country. A central bank has the authority to regulate and control the banking business and monetary system of a country. Its main function are: Bank of issue Financial advisor to the state( banker also) Banker to bank Custodian of foreign exchange reserves Lender of the last resort Bank of central clearance and transfer Controller of credit

Two important tools of macroeconomic policy . They are : Monetary Policy

Fiscal Policy

The Monetary Policy is different from Fiscal Policy as the former brings about a change in the economy by changing money supply and interest rate, whereas fiscal policy is a broader tool with the government.

This policy statement, traditionally announced twice a year, through which the Reserve Bank of India seeks to ensure price stability for the economy. Regulates the supply of money and the cost and availability of credit in the economy. Deals with both the lending and borrowing rates of interest for commercial banks. Policy aims to maintain price stability, full employment and economic growth. The Reserve Bank of India is responsible for formulating and implementing Monetary Policy by increase or decrease the supply of currency as well as interest rate, carry out open market operations, control credit and vary the reserve requirements.



Minimum rate at which the central bank provides loans to the commercial banks. It is also called the discount rate. Usually, an increase in bank rate results in commercial banks increasing their lending rates. Changes in bank rate affect credit creation by banks through altering the cost of credit.

Reserve Ratio

All commercial banks are required to keep a certain amount of its deposits in cash with RBI. This percentage is called the cash reserve ratio. The current CRR requirement is 6 per cent.


Supply (M3)

Refers to the total volume of money circulating in the economy, & comprises currency with the public and demand deposits (current account + savings account) with the public. The RBI has adopted Three concepts of measuring money supply. The first one is M1, which equals the sum of currency with the public, demand deposits with the public and other deposits with the public. Simply put M1 includes all coins and notes in circulation, and personal current accounts. The second, M2, is a measure of money, supply, including M1, plus personal deposit accounts - plus government deposits and deposits in currencies other than rupee. The third concept M3 or the broad money concept, as it is also known, is quite popular. M3 includes net time deposits (fixed deposits), savings deposits with post office saving banks and all the components of M1.


Liquidity Ratio(SLR)

Banks in India are required to maintain 25 per cent of their demand and time liabilities in government securities and certain approved securities. These are collectively known as SLR securities. The buying and selling of these securities laid the foundations of the 1992 Harshad Mehta scam.

A repurchase agreement or ready forward deal is a secured short-term (usually 15 days) loan by one bank to another against government securities. Legally, the borrower sells the securities to the lending bank for cash, with the stipulation that at the end of the borrowing term, it will buy back the securities at a slightly higher price, the difference in price representing the interest.


Market Operations

An important instrument of credit control, the Reserve Bank of India purchases and sells securities in open market operations.


Rate at which Reserve Bank of India (RBI) borrows money from banks. Banks are always happy to lend money to RBI since their money are in safe hands with a good interest. An increase in Reverse repo rate can cause the banks to transfer more funds to RBI due to this attractive interest rates. It can cause the money to be drawn out of the banking system. Due to this fine tuning of RBI using its tools of CRR, Bank Rate, Repo Rate and Reverse Repo rate our banks adjust their lending or investment rates for common man.


Fiscal policy is a broader tool with the government. The Fiscal Policy can be used to overcome recession and control inflation. Defined as a deliberate change in government revenue and expenditure to influence the level of national output and prices. For instance, at the time of recession the government can increase expenditures or cut taxes in order to generate demand.

On the other hand, the government can reduce its expenditures or raise taxes during inflationary times. Fiscal policy aims at changing aggregate demand by suitable changes in government spending and taxes. The annual Union Budget showcases the government's Fiscal Policy. We can say in case of RBI Monetary Policy + Governmental Aspect = Fiscal Policy

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