monetry policy

 MONETRY POLICY:-

• It is the process by which monetry authority of a country  generally a central bank controls the supply of Money in the economy by controlling over interest rates in order to maintain price stability and achieve high economic growth.
•  Presently monetry policy is reveiwed in every 2 months on the recommandation of Urjit Patel From 1st April 2014(deputy Governer of RBI) in past.
• The Central Monetry authority in the country is the RBI.
• RBI uses 2 types of method to monitor Monetry Policy.
• 1-Quantative type     2-Qualitative type

QUANTITATIVE METHOD:-
    
INTEREST:-  It is known as rent of Money.
BASIS POINT:-  It refers to a common unit of measurement for interest rate.
                   1% = 100 Basis Point
REPO RATE:-  the rate at which RBI lands money to commercial bank for short term (90days)  Of 5 carores and its multiple.
BANK RATE:- The bank rate refers to the minimum rate at which the Central bank provides financial help to commercial bank for long term (Greater than 90 days and less the 1 year).
REVERSE REPO RATE:- It is the rate at which the commercial bank park axix money to RBI.
INTEREST RATE CORRIDOR:- it refers to the window between the repo rate and reverse repo rate where reverse repo rate acts as floor interest rate and repo rate acts as roof interest rate.
BPLR:- (BENCH MARK LENDING RATE)  It is the interest rate that commercial bank normally charge or we can say that they were excepted to charge their most credit worthy customer.
 The BPLR system introduced in 2013 fell sort of it's Originated Objective of bringing Transparency to lending rates.
BASE RATE:-  It is minimum rate of commerical bank below it can't land accept cases allowoed by RBI.
  Base rate replace the BPLR system from 1 July 2010 The RBI has given the freedom to commerical bank to choose their freedom to commercial bank to choose their base rate.
MCLR :- (MARGINAL COST OF FUND BASED LENDING RATES) :- 
 As per new guideline by RBI from 1st April 2016 the base rate is replace  by MCLR. the MCLR would be revised on monthly bases.
the bank has to said five different bench mark rates for different time period. as 1 day, 1months, Quaterly, half yearly, annually,)
L.A.F.:- (LIQUIDITY ADJUSTMENT FACILITY)  It is a monetry through repurchase agreement  L.A.F. is used to aid banks in adujsting day to day mismatch in liquidity.
it is consists of repo rate and revers repo rate . it was introduced by RBI in year 2000.