Which of the following is/are various components/channels of the monetary policy of the RBI?begin{enumerate}item Altering money supplyitem credit availabilityitem Influencing exchange ratesend{enumerate}

BANKING GENERAL KNOWLEDGE

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

Which of the following is/are various components/channels of the monetary policy of the RBI?

A	Only 1 & 2
B	Only 2 & 3
C	Only 1 & 3
D	Only 1

Explanation:

Detailed explanation-1: -There are two components to this instrument of monetary policy, namely – The Cash Reserve Ratio (CLR) and the Statutory Liquidity Ratio (SLR). Let us understand them both. Cash Reserve Ratio (CRR) is the portion of deposits with the commercial banks that it has to deposit to the RBI.

Detailed explanation-2: -The main instruments of the monetary policy are Cash Reserve Ratio, Statutory Liquidity Ratio, Bank Rate, Repo Rate, Reverse Repo Rate, and Open Market Operations.

Detailed explanation-3: -The change in the official interest rate is usually transmitted to the economy via four different but interconnected channels – market rates, expectations, asset prices, and exchange rates.

Detailed explanation-4: -The Fed has traditionally used three tools to conduct monetary policy: reserve requirements, the discount rate, and open market operations. In 2008, the Fed added paying interest on reserve balances held at Reserve Banks to its monetary policy toolkit.

There is 1 question to complete.