New Credit Control Techniques Of Rbi In 2023


RBI Credit Control
RBI Credit Control from www.slideshare.net

New Credit Control Techniques of RBI in 2023

Introduction

The Reserve Bank of India (RBI) is the central banking institution of India and controls the monetary policy of the Indian currency. The RBI uses a variety of instruments to control credit in the economy. Some of these instruments are discussed in this article.

Cash Reserve Ratio (CRR)

The Cash Reserve Ratio (CRR) is the percentage of total deposits that banks must keep with the RBI. The CRR is used by the RBI to control the amount of credit that banks can give. By increasing the CRR, the RBI can make it more difficult for banks to lend, thus reducing the amount of money in the economy. The current CRR is 4%.

Statutory Liquidity Ratio (SLR)

The Statutory Liquidity Ratio (SLR) is the percentage of total deposits that banks are required to maintain in liquid form. This includes cash, gold, and other approved securities. The SLR is used by the RBI to control the amount of credit that banks can give. By increasing the SLR, the RBI can make it more difficult for banks to lend, thus reducing the amount of money in the economy. The current SLR is 18%.

Open Market Operations (OMOs)

The RBI has the power to buy and sell government securities in the open market. By buying government securities, the RBI can increase the money supply in the economy. By selling government securities, the RBI can reduce the money supply in the economy. This is known as Open Market Operations (OMOs). The RBI uses OMOs to control the amount of credit in the economy.

Repo and Reverse Repo Rates

The Repo Rate is the rate at which the RBI lends money to commercial banks. The Reverse Repo Rate is the rate at which the RBI borrows money from commercial banks. By increasing the Repo Rate, the RBI can make it more expensive for banks to borrow money, thus reducing the amount of money in the economy. By decreasing the Reverse Repo Rate, the RBI can make it more attractive for banks to lend money, thus increasing the amount of money in the economy. The current Repo Rate is 6.25% and the Reverse Repo Rate is 5.75%.

Conclusion

The Reserve Bank of India (RBI) is the central banking institution of India and controls the monetary policy of the Indian currency. The RBI uses a variety of instruments to control credit in the economy, such as the Cash Reserve Ratio (CRR), the Statutory Liquidity Ratio (SLR), Open Market Operations (OMOs), and the Repo and Reverse Repo Rates. By using these instruments, the RBI can increase or decrease the amount of credit available in the economy and thus control the money supply.


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