Monetary & Credit Policy

Monetary Policy

It refers to that policy by which central bank of the country controls(i) the supply of money, and (ii) cost of money or the rate of interest, with a view to achieve particular objectives.

Monetary Policy of India: It is formulated and executed by the Reserve
Bank of India to achieve specific objectives.

Main Elements of the Monetary Policy of India

• It regulates the stocks and the growth rate of money supply.
• It regulates the entire banking system of the economy.
• It determines the allocation of loans among different sectors.
• It provides incentives to promote savings and to raise the savings-income ....