BANKING AFFAIRS

Detailed explanation-1: -Under the Reserve Bank of India, Act, 1934 (RBI Act, 1934 ) (as amended in 2016), RBI is entrusted with the responsibility of conducting monetary policy in India with the primary objective of maintaining price stability while keeping in mind the objective of growth.

Detailed explanation-2: -Central banks conduct monetary policy by adjusting the supply of money, usually through buying or selling securities in the open market. Open market operations affect short-term interest rates, which in turn influence longer-term rates and economic activity.

Detailed explanation-3: -The monetary policy is governed by the Central Bank of the country. On the other hand, fiscal policy is directed by the Finance Ministry.

Detailed explanation-4: -Developing the Monetary Policy in India is a prerogative of the Reserve Bank of India. Hence, it is also called the Monetary Policy of RBI. The RBI is vested with this responsibility under the RBI Act, 1934. The Monetary policy of RBI regulates the money supply, availability of credit and interest rates.