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Foreign Exchange and Exchange Rate

The Reserve B...

Question

The Reserve Bank of India (RBI) recently announced a hike in some policy rates and also indicated that there may be another change in near future. Which of the following is/are considered a policy rate(s) in the hands of the RBI?
A. Repo Rate
B. SLR
C. Inflation

A

Only (A)

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B

Only (B)

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C

Only (C)

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D

Only (A) and (B)

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Solution

The correct option is C Only (A) and (B)
RBI is the apex bank. It has the power to control the credit supply in an economy through monetary and fiscal policy.The Reserve Bank of India (RBI) recently announced a hike in some policy rates and also indicated that there may be another change in near future. Repo rate and SLR are considered a policy rates in the hands of the RBI. Repo rate is the rate at which central bank ends money to commercial banks. Statutory Liquidity Ratio rfers to the reserve amount which are to be maintained by the commercial banks in terms of gold and iiquid assets.

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Q. Many a time we read in newspapers that some big banks have revised their lending rates to make them dearer or cheaper. Though the decision to raise the lending rates is always in the hands of the banks, normally they announce this decision of theirs
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Q. Read the extract given below and answer the questions that follow:
Aug 17, 2015
Mumbai Bankers today said, the sharp fall in inflation to 3.38% for July has raised hopes of another rate cut by RBI at September review of the policy. "Obviously, if more and more and more positive news on inflating front comes. It's a reasonable expectation to expect that rules will be out at the September policy", reported Mr. Aditya Puri the Managing Director of HDFC bank. He said the Governor of RBI, Mr. Raghuram Rajan had earlier said that RBI is actively looking at rate cut.
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