Write down the major instruments of monetary policy?
Monetary policy refers to the process by which the Reserve Bank of India (RBI) controls the supply of money, interest rates, and credit availability in the economy to maintain price stability, economic growth, and financial stability. The major instruments of monetary policy in India can be classified into quantitative and qualitative instruments.
### Quantitative Instruments
These instruments regulate the overall money supply and credit availability in the economy.
1. Cash Reserve Ratio (CRR) – It is the percentage of a bank’s total deposits that must be maintained with the RBI in the form of liquid cash. A higher CRR reduces the money supply, controlling inflation, while a lower CRR increases liquidity, boosting economic activity.
2. Statutory Liquidity Ratio (SLR) – It is the percentage of a bank’s net demand and time liabilities (NDTL) _______ _________ _____ ______ _____ ___ _______ __________.
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