SUBMITED BY.

REGISTRATION SECTION
NO.
Ashish Kumar 11606100 Q1608
Chandani 11606041 Q1608
Krishna vamsi 11609586 Q1608
 INRODUCTION OF RBI
It is the Central Bank of India
Established in 1st April 1935 under the Initially it was Privately Owned.
RESERVE BANK OF INDIA ACT.
Its head quarter is in Mumbai
(Maharashtra). Its present governor is Dr.
Raghuram Rajan.
It has 19 Regional Offices, most of
them in State capitals
It was set up on the recommendations
of the Hilton Young Commission.
It was started as Share-Holders Bank
with a paid up capital of 5 crores.
Initially it was located in Kolkata.
It moved to Mumbai in 1937.
MONETARY POLICY

MONETARY POLICY
Monetary policy refers to the use of monetary instruments under the
control of the central bank to regulate magnitudes such as interest
rates, money supply and availability of credit with a view to achieving
the ultimate objective of economic policy.
The Reserve Bank of India (RBI) is vested with the responsibility of
conducting monetary policy. This responsibility is explicitly mandated
under the Reserve Bank of India Act, 1934.
 Key decisions pertaining to benchmark interest rates used to be taken by the Governor of Reserve Bank of
India alone prior to the establishment of the committee. The Governor of RBI is appointed and can be
disqualified by the Government anytime. This lead to uncertainty and resulted in friction between the
Government and the RBI, especially during the times of low growth and high inflation. Before the constitution of
the MPC, a Technical Advisory Committee (TAC) on monetary policy with experts from monetary economics,
central banking, financial markets and public finance advised the Reserve Bank on the stance of monetary
policy. However, its role was only advisory in nature.
The setting up of a committee to decide on Monetary Policy was first proposed by the Urjit Patel Committee.
The Committee suggested a five-member MPC - three members from the RBI and two nominated by the
Government. The Government initially proposed a seven-member committee- three from the RBI and four
nominated by it. Subsequent negotiations led to the current composition of the committee, with the external
members having a four year term.
The Reserve Banks Monetary Policy Department (MPD) assists the MPC in formulating the monetary policy.
Views of key stakeholders in the economy, and analytical work of the Reserve Bank contribute to the process for
arriving at the decision on the policy repo rate. The Financial Markets Operations Department (FMOD)
operationalises the monetary policy, mainly through day-to-day liquidity management operations. The Financial
Markets Committee (FMC) meets daily to review the liquidity conditions so as to ensure that the operating
target of monetary policy (weighted average lending rate) is kept close to the policy repo rate.
The composition of the current and first monetary policy committee is as follows
Governor of the Reserve Bank of India Chairperson, ex officio - Urjit Patel
Deputy Governor of the Bank, in charge of Monetary PolicyMember, ex officio - Viral A Acharya
One officer of the Reserve Bank of India to be nominated by the Central Board Member, ex officio; - Michael
Patra
Shri Chetan Ghate, Professor, Indian Statistical Institute (ISI) Member;
Professor Pami Dua, Director, Delhi School of Economics Member;
Dr. Ravindra H. Dholakia, Professor, Indian Institute of Management, Ahmedabad - Member
Members referred to at 4 to 6 above, will hold office for a period of four years
from the date of appointment while the other three members are official.
 The Goals of Monetary Policy.
The Monetary Policy Framework
The Monetary Policy Process.
Instruments of Monetary Policy.
Open and Transparent Monetary Policy Making.
Legal Framework
 The Goals of Monetary Policy
The primary objective of monetary policy is to target:(a) the average inflation is more than the upper
maintain price stability while keeping in mind the tolerance level of the inflation target for any three
objective of growth. Price stability is a necessary consecutive quarters; or (b) the average inflation is less
precondition to sustainable growth. than the lower tolerance level for any three
In May 2016, the Reserve Bank of India (RBI) Act, 1934 consecutive quarters.
was amended to provide a statutory basis for the Prior to the amendment in the RBI Act in May 2016,
implementation of the flexible inflation targeting the flexible inflation targeting framework was
framework. governed by an Agreement on Monetary Policy
Framework between the Government and the Reserve
The amended RBI Act also provides for the inflation
Bank of India of February 20, 2015.
target to be set by the Government of India, in
consultation with the Reserve Bank, once in every five
years. Accordingly, the Central Government has
notified in the Official Gazette 4 per cent Consumer
Price Index (CPI) inflation as the target for the period
from August 5, 2016 to March 31, 2021 with the upper
tolerance limit of 6 per cent and the lower tolerance
limit of 2 per cent.
The Central Government notified the following as
factors that constitute failure to achieve the inflation
The Monetary Policy Framework
The amended RBI Act explicitly provides the legislative the monetary policy stance. The liquidity management
mandate to the Reserve Bank to operate the monetary framework was last revised significantly in April 2016.
policy framework of the country.
The framework aims at setting the policy (repo) rate
based on an assessment of the current and evolving
macroeconomic situation; and modulation of liquidity
conditions to anchor money market rates at or around
the repo rate. Repo rate changes transmit through the
money market to the entire the financial system, which,
in turn, influences aggregate demand a key
determinant of inflation and growth.
Once the repo rate is announced, the operating
framework designed by the Reserve Bank envisages
liquidity management on a day-to-day basis through
appropriate actions, which aim at anchoring the
operating target the weighted average call rate
(WACR) around the repo rate.
The operating framework is fine-tuned and revised
depending on the evolving financial market and
monetary conditions, while ensuring consistency with
The Monetary Policy Process
Section 45ZB of the amended RBI Act, 1934 also
provides for an empowered six-member monetary
policy committee (MPC) to be constituted by the
Central Government by notification in the Official
Gazette. Accordingly, the Central Government in
September 2016 constituted the MPC as under:
1. Governor of the Reserve Bank of India Chairperson, ex officio;
2. Deputy Governor of the Reserve Bank of India, in charge of
Monetary Policy Member, ex officio;
3. One officer of the Reserve Bank of India to be nominated by the
Central Board Member, ex officio;
4. Shri Chetan Ghate, Professor, Indian Statistical Institute (ISI)
Member;
5. Professor Pami Dua, Director, Delhi School of Economics
Member; and
6. Dr. Ravindra H. Dholakia, Professor, Indian Institute of
Management, Ahmedabad Member.
(Members referred to at 4 to 6 above, will hold office for a period
of four years or until further orders, whichever is earlier.)
The MPC determines the policy interest rate required to Reserve Bank on the stance of monetary policy.
achieve the inflation target. The first meeting of the
MPC was held on October 3 and 4, 2016 in the run up
to the Fourth Bi-monthly Monetary Policy Statement,
2016-17.
The Reserve Banks Monetary Policy Department (MPD)
assists the MPC in formulating the monetary policy.
Views of key stakeholders in the economy, and
analytical work of the Reserve Bank contribute to the
process for arriving at the decision on the policy repo
rate.
The Financial Markets Operations Department (FMOD)
operationalises the monetary policy, mainly through
day-to-day liquidity management operations. The
Financial Markets Committee (FMC) meets daily to
review the liquidity conditions so as to ensure that the
operating target of monetary policy (weighted average
lending rate) is kept close to the policy repo rate.
Before the constitution of the MPC, a Technical
Advisory Committee (TAC) on monetary policy with
experts from monetary economics, central banking,
financial markets and public finance advised the
However, its role was only advisory in nature. With the
formation of MPC, the TAC on Monetary Policy ceased
to exist.
Instruments of Monetary Policy
There are several direct and indirect
instruments that are used for
implementing monetary policy.
Repo Rate: The (fixed) interest rate at which the
Reserve Bank provides overnight liquidity to banks
against the collateral of government and other
approved securities under the liquidity adjustment
facility (LAF).
Reverse Repo Rate: The (fixed) interest rate at which
the Reserve Bank absorbs liquidity, on an overnight
basis, from banks against the collateral of eligible
government securities under the LAF.
Liquidity Adjustment Facility (LAF): The LAF consists of
overnight as well as term repo auctions. Progressively,
the Reserve Bank has increased the proportion of
liquidity injected under fine-tuning variable rate repo
auctions of range of tenors. The aim of term repo is to
help develop the inter-bank term money market, which
in turn can set market based benchmarks for pricing of
loans and deposits, and hence improve transmission of
monetary policy. The Reserve Bank also conducts
variable interest rate reverse repo auctions, as
necessitated under the market conditions.
Marginal Standing Facility (MSF): A facility under which
scheduled commercial banks can borrow additional
amount of overnight money from the Reserve Bank by
dipping into their Statutory Liquidity Ratio (SLR)
portfolio up to a limit at a penal rate of interest. This
provides a safety valve against unanticipated liquidity
shocks to the banking system.
Corridor: The MSF rate and reverse repo rate
determine the corridor for the daily movement in the
weighted average call money rate.
REPO RATE 4%
REVERSE REPO RATE 5.75%
LIQUIDITY ADJUSTMENT FACILITY
MARGINAL STANDING FACILITY 6.25%
 Bank Rate: It is the rate at which the Reserve Bank is Market Stabilisation Scheme (MSS): This instrument
ready to buy or rediscount bills of exchange or other for monetary management was introduced in 2004.
commercial papers. The Bank Rate is published under Surplus liquidity of a more enduring nature arising from
Section 49 of the Reserve Bank of India Act, 1934. This large capital inflows is absorbed through sale of short-
rate has been aligned to the MSF rate and, therefore, dated government securities and treasury bills. The
changes automatically as and when the MSF rate cash so mobilized is held in a separate government
changes alongside policy repo rate changes. account with the Reserve Bank.
Cash Reserve Ratio (CRR): The average daily balance BANK RATE 6.25%
that a bank is required to maintain with the Reserve
CASH RESERVE RATIO 4%
Bank as a share of such per cent of its Net demand and
time liabilities (NDTL) that the Reserve Bank may notify STATUTORY LIQUIDITY RATIO 19.5%
from time to time in the Gazette of India.
Statutory Liquidity Ratio (SLR): The share of NDTL that
a bank is required to maintain in safe and liquid assets,
such as, unencumbered government securities, cash
and gold. Changes in SLR often influence the availability
of resources in the banking system for lending to the
private sector.
Open Market Operations (OMOs): These include both,
outright purchase and sale of government securities,
for injection and absorption of durable liquidity,
respectively.
Open and Transparent Monetary Policy Making
Under the amended RBI Act, the monetary ascribed to such member; and
policy making is as under: c. the statement of each member on the
resolution adopted.
The MPC is required to meet at least four times
in a year. Once in every six months, the Reserve Bank is
required to publish a document called the
The quorum for the meeting of the MPC is four Monetary Policy Report to explain:
members. a. the sources of inflation; and
Each member of the MPC has one vote, and in b. the forecast of inflation for 6-18 months ahead.
the event of an equality of votes, the Governor
has a second or casting vote.
The resolution adopted by the MPC is
published after conclusion of every meeting of
the MPC in accordance with the provisions of
Chapter III F of the Reserve Bank of India Act,
1934.
On the 14th day, the minutes of the
proceedings of the MPC are published which
include:
a. the resolution adopted by the MPC;
b. the vote of each member on the resolution,
Legal Framework
Reserve Bank of India Act, 1934 as amended from time to time.
 Date : Oct 18, 2017
Minutes of the Monetary Policy Committee Meeting October 3-4, 2017

[Under Section 45ZL of the Reserve Bank of India Act, 1934]

The seventh meeting of the Monetary Policy Committee (MPC), constituted under section 45ZB of the amended
Reserve Bank of India Act, 1934, was held on October 3 and 4, 2017 at the Reserve Bank of India, Mumbai.
2. The meeting was attended by all the members - Dr. Chetan Ghate, Professor, Indian Statistical Institute; Dr. Pami
Dua, Director, Delhi School of Economics; Dr. Ravindra H. Dholakia, Professor, Indian Institute of Management,
Ahmedabad; Dr. Michael Debabrata Patra, Executive Director (the officer of the Reserve Bank nominated by the
Central Board under Section 45ZB(2)(c) of the Reserve Bank of India Act, 1934); Dr. Viral V. Acharya, Deputy
Governor in charge of monetary policy - and was chaired by Dr. Urjit R. Patel, Governor.
3. According to Section 45ZL of the amended Reserve Bank of India Act, 1934, the Reserve Bank shall publish, on the
fourteenth day after every meeting of the Monetary Policy Committee, the minutes of the proceedings of the
meeting which shall include the following, namely:
the resolution adopted at the meeting of the Monetary Policy Committee
the vote of each member of the Monetary Policy Committee, ascribed to such member, on the resolution
adopted in the said meeting; and
the statement of each member of the Monetary Policy Committee under sub-section (11) of section 45ZI on the
resolution adopted in the said meeting.
 Date : Oct 04, 2017

Fourth Bi-monthly Monetary Policy Statement, 2017-18 Resolution of the Monetary Policy Committee (MPC) Reserve
Bank of India

On the basis of an assessment of the current and evolving macroeconomic situation at its meeting today, the Monetary
Policy Committee (MPC) decided to:
keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.0 per cent.
Consequently, the reverse repo rate under the LAF remains at 5.75 per cent, and the marginal standing facility (MSF) rate
and the Bank Rate at 6.25 per cent.
The decision of the MPC is consistent with a neutral stance of monetary policy in consonance with the objective of
achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent,
while supporting growth.
 Date : Aug 16, 2017
Minutes of the Monetary Policy Committee Meeting August 1-2, 2017

[Under Section 45ZL of the Reserve Bank of India Act, 1934]

The sixth meeting of the Monetary Policy Committee (MPC), constituted under section 45ZB of the amended Reserve Bank of India Act, 1934, was
held on August 1 and 2, 2017 at the Reserve Bank of India, Mumbai.
2. The meeting was attended by all the members - Dr. Chetan Ghate, Professor, Indian Statistical Institute; Dr. Pami Dua, Director, Delhi School of
Economics; Dr. Ravindra H. Dholakia, Professor, Indian Institute of Management, Ahmedabad; Dr. Michael Debabrata Patra, Executive Director (the
officer of the Reserve Bank nominated by the Central Board under Section 45ZB(2)(c) of the Reserve Bank of India Act, 1934); Dr. Viral V. Acharya,
Deputy Governor in charge of monetary policy - and was chaired by Dr. Urjit R. Patel, Governor.
3. According to Section 45ZL of the amended Reserve Bank of India Act, 1934, the Reserve Bank shall publish, on the fourteenth day after every
meeting of the Monetary Policy Committee, the minutes of the proceedings of the meeting which shall include the following, namely:
a.the resolution adopted at the meeting of the Monetary Policy Committee;
b.the vote of each member of the Monetary Policy Committee, ascribed to such member, on the resolution adopted in the said meeting; and
c.the statement of each member of the Monetary Policy Committee under sub-section (11) of section 45ZI on the resolution adopted in the said
meeting.
4. The MPC reviewed the surveys conducted by the Reserve Bank to gauge consumer confidence, households inflation expectations, corporate
sector performance, credit conditions, the outlook for the industrial, services and infrastructure sectors, and the projections of professional
forecasters. The Committee reviewed in detail staffs macroeconomic projections, and alternative scenarios around various risks to the outlook.
Drawing on the above and after extensive discussions on the stance of monetary policy, the MPC adopted the resolution that is set out below.
Resolution
5. On the basis of an assessment of the current and evolving macroeconomic situation at its meeting today, the Monetary Policy Committee (MPC)
decided to:
reduce the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 6.25 per cent to 6.0 per cent with immediate
effect.
Consequently, the reverse repo rate under the LAF stands adjusted to 5.75 per cent, and the marginal standing facility (MSF) rate and the Bank Rate
to 6.25 per cent.
The decision of the MPC is consistent with a neutral stance of monetary policy in consonance with the objective of achieving the medium-term
target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth
 Gold Monetisation Scheme, 2015

RBI/2017-18/79
DGBA.GBD.No.1007/15.04.001/2017-18
October 17, 2017
All Agency Banks
Dear Sir/Madam
Gold Monetisation Scheme, 2015
Please refer to DGBA circular DGBA.GAD.No.2294/15.04.001/2016-17 dated March 6, 2017 read with RBI Master Direction No.DBR.IBD.No.45/23.67.003/2015-16
dated October 22, 2015 (updated up to March 31, 2016) on the above subject.
2. It has been decided that reimbursement of payments made by banks, relating to Medium and Long Term Government Deposit (MLTGD), will be made by Central
Account Section (CAS), Nagpur, RBI.
3. Accordingly, banks are advised to pay immediately the interest amount already due to the depositors and to take note that, in future, payment of interest to the
depositors is to be made on the due dates. After making payments, the banks may raise claim to Government through RBI (CAS, Nagpur).
Yours faithfully
(D J Babu)
Deputy General Manager
 Deendayal Antyodaya Yojana - National Rural Livelihoods Mission (DAY-NRLM) - Aajeevika - Interest Subvention Scheme

RBI/2017-18/80
FIDD.GSSD.CO.BC.No.17/09.01.03/2017-18
October 18, 2017
The Chairman / Managing Director
Public and Private Sector Banks
(As per list in Annexure II)
Dear Sir / Madam,
Deendayal Antyodaya Yojana - National Rural Livelihoods Mission (DAY-NRLM) - Aajeevika - Interest Subvention
Scheme
Please refer to our circular FIDD.GSSD.CO.BC.NO.13/09.01.03/2016-17 dated August 25, 2016 on Interest Subvention Scheme under
Deendayal Antyodaya Yojana - National Rural Livelihoods Mission (DAY-NRLM).
2. The revised guidelines for the year 2017-18 on Interest Subvention Scheme under DAY- NRLM, as received from the Ministry of Rural
Development, Government of India, are annexed for implementation by 21 Public Sector Banks and 19 Private Sector Banks (as per list
attached). The circular in respect of RRBs and Co-operative banks will be issued by NABARD.
Yours faithfully
(Ajay Kumar Misra)
Chief General Manager
Encl: As above
 DATE-1 NOV. 2017

Reserve Money for the week ended October 27, 2017

The Reserve Bank of India has today released data on Reserve Money for the week ended October 27, 2017.
Anirudha D. Jadhav
Assistant Manager
Press Release: 2017-2018/1209
 Date : Oct 25, 2017

Governors statement

Governors statement on public sector banks recapitalization is attached.

Jose J. Kattoor
Chief General Manager
Press Release: 2017-2018/1124
We got this assignments from our banking teacher to get deep knowledge
of At last we came to know about RBI from the begging of RBI the RBI act
and the monitory policy of committee role in RBI. We also came to know
that the rate are increase or decrease on weekly, we now familiar with
news related with banking sector.
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