Reserve Bank of India

What is a Contractionary Policy?

Contractionary Policy refers to the monetary policy which aims to slow down the economy by introducing a reduction in money supply for lesser money and investment. There are many economic tools used by the Central Bank of every nation like CRR, SLR, Repo, Reverse Repo, Interest Rate etc. to keep a check on the volume […]


What is the meaning of Cash Reserve Ratio?

Cash Reserve Ratio is a specific amount of funds which the commercial banks have to keep with the Reserve Bank of India to ensure liquidity in the system. The funds are a part of the Net Demand and Time Liabilities (NDTL). A reduction in CRR leads to more liquidity in the system as the banks […]

What is the meaning of Base Rate?

Base Rate is the lowest rate which is defined by the Reserve Bank of India for bankers to lend further. Banks cannot lower the rate any further for its customers. The primary aim of the base rate is to increase transparency in the credit market and make sure that the banks are passing the lowest […]

Small Finance Banks

On 27 November 2014, RBI had released the guidelines on Small Finance Banks along with the Payment Banks. The objective of small finance banks is to further financial inclusion by providing: Basic banking facilities to the unbanked and thereby boosting saving habits. Supply of credit to small business units, small and marginal farmers, micro and […]

RBI’s Monetary Policy

Monetary policy refers all those operations, which are used to control the money supply in the economy. The overall objective of the monetary policy is twofold: To maintain economic and financial stability To ensure adequate financial resources for the purpose of development. These objectives can be further simplified to: Maintaining price stability Adequate flow of credit […]