INSTITUTE USB

DEPARTMENT BBA
Domain Aptitude
Code- BAT 226
Faculty Name: Harpreet Kaur

Monetory Policy Corridor DISCOVER . LEARN . EMPOWER

 Course Objective
The objective of this course is to impart in-depth
knowledge to the students regarding the theory
and practice of Domain Aptitude.
Course Outcome
CO Title Level
Number
CO1 To understand fundamentals of Remember
Domain Aptitude Source:
https://bizfluent.com/about-66
CO2 To understand different banking Understand 58752-definition.html
terminologies
 MONETORY POLICY CORRIDOR
• The RBI’s monetary policy tool kit that includes the instruments like
repo, LAF often undergoes change. With time and financial sector
developments new instruments may come. One such newly inducted
instrument is the monetary policy corridor. As the name suggests, it
indicate an area between two rates of the RBI’s monetary policy.
• Monetary Policy Corridor refers to the area between the lower reverse
repo rate and the upper ceiling rate of MSF rate. Reverse repo rate will
be the lowest of the policy rates whereas Marginal Standing Facility is
something like an upper ceiling with a higher rate than the repo rate. The
MSF rate and reverse repo rate determine the corridor for the daily
movement in the weighted average call money rate.
 MONETORY POLICY CORRIDOR
• Policy corridor refers to the range within which the operating target of
the monetary policy (i.e. the weighted average call money market rate)
moves around the policy rate announced by the central bank.
• If the weighted average call money market rate remains within the
corridor, it shows a comfortable liquidity situation in the financial
system and economy.
• In India, the monetary policy corridor refers to the difference between
the reverse repo rate and the high cost MSF rate.
 MONETORY POLICY CORRIDOR
• As per the monetary policy of the RBI, ideally, the call rate should travel
within the corridor showing a comfortable liquidity situation in the
financial system and economy.
• The corridor structure for the policy rate is a helping guide for the RBI to
design its monetary policy operations. Call money rate is the operating
target of monetary policy. As far as the call rate lies within the corridor,
there is not much liquidity disturbance in the system.
MONETORY POLICY CORRIDOR
THANK YOU
For queries
Email: harpreet.e11247@cumail.in