Money and Banking (part – II)

The Reserve Bank of India (RBI) is the Central Bank of India whose primary function is to manage and govern the financial system of the country. It is a statutory body established in the your 1935 under the Reserve Bank of India Act, 1934. The Central Bank regulates the issue and supply of the Indian rupee. It also looks after the Central Government's money. The Central Bank plays the role of the banker's bank and regulates the banking sector. It advises the commercial banks on monetary matters. In times of need, the RBI lends funds to the commercial banks and commercial banks retain their It also plays an important role in India's deposits with the RBI development story by supporting the government in its  developmental projects and policies.

The Reserve Bank of India (RBI) is the Central Bank of India whose primary function is to manage and govern the financial system of the country. It is a statutory body established in the your 1935 under the Reserve Bank of India Act, 1934. The Central Bank regulates the issue and supply of the Indian rupee. It also looks after the Central Government's money. The Central Bank plays the role of the banker's bank and regulates the banking sector. It advises the commercial banks on monetary matters. In times of need, the RBI lends funds to the commercial banks and commercial banks retain their It also plays an important role in India's deposits with the RBI development story by supporting the government in its  developmental projects and policies.

Monetary policy is complementary to fiscal policy. They are interrelated and have to be judiciously combined to promote and stabilize the economic activity. Monetary policy influences the aggregate demand, and, in turn, output, income and employment, indirectly by regulating the flow of credit and money supply while fiscal policy has direct, through lagged, impact on aggregate demand. Monetary Policy is more effective during inflation, while fiscal policy is more effective during deflation.

Equitable distribution of income and assets is not an objective of monetary policy. Rest three are the objectives of monetary policy.

The monetary policy in India was earlier (till 2016) formulated by the Reserve Bank of India. At present, the Monetary Policy Committee (MPC) constituted by the Central Government determines the policy interest rate required to achieve the inflation target. RBI's Monetary Policy Department (MPD) assists the MPC in formulating the monetary policy. The RBI is vested with the responsibility of conducting monetary policy which is explicitly mandated under the RBI Act, 1934. - The primary objective of monetary policy is to maintain price stability while keeping in mind the objective of growth.

The monetary policy in India was earlier (till 2016) formulated by the Reserve Bank of India. At present, the Monetary Policy Committee (MPC) constituted by the Central Government determines the policy interest rate required to achieve the inflation target. RBI's Monetary Policy Department (MPD) assists the MPC in formulating the monetary policy. The RBI is vested with the responsibility of conducting monetary policy which is explicitly mandated under the RBI Act, 1934. - The primary objective of monetary policy is to maintain price stability while keeping in mind the objective of growth.

The Monetary Policy Committee (MPC) is responsible for fixing the RBI's benchmark interest rates. The MPC comprises six member - three officials of the RBI including the Governor of RBI and three external member nominated by the Government of India. External members will hold office for a period of four years from the date of appointment while other three members are official. The Governor of RBI is the ex-officio chairperson of the Committee. Therefore among the given statements, only statement 1 is correct.

In India, 'Money and Credit' is controlled by the Reserve Bank of India (RBI). For this, the RBI uses qualitative and quantitative measures.