Mains Paper II · 1 Indian Economy · APPSC Group 2

1.6 Money and monetary policy notes

6 notes, in reading order.

  1. 1.6.1Money: functions, legal tender and money supply measures (M0–M4, money multiplier)

    Money is anything widely accepted in exchange; India measures it in layers from M0 (the base RBI controls) to M3 and M4 (the broad stock), and banks multiply the base into the wider money supply.

    Advanced · 7 min · Full course
  2. 1.6.2Currency management: note issue, coinage, demonetisation 2016 and the digital rupee

    RBI issues notes and the Government mints coins; demonetisation (2016) withdrew ₹500 and ₹1,000 notes overnight, and the digital rupee is RBI's new electronic form of legal tender.

    Advanced · 6 min · Full course
  3. 1.6.3Reserve Bank of India: history, governance and functions

    RBI is India's central bank: it issues currency, runs monetary policy, regulates banks and payments, manages forex and acts as banker to the Government and to banks.

    Advanced · 6 min · Full course
  4. 1.6.4Monetary policy tools: CRR, SLR, bank rate, open market operations and qualitative controls

    RBI changes the cost and amount of credit through quantitative tools (CRR, SLR, bank rate, OMO) and qualitative tools (margin, moral suasion, selective controls).

    Advanced · 6 min · Full course
  5. 1.6.5Liquidity management: LAF corridor, repo, SDF, MSF, MSS and sterilisation

    RBI keeps the short-term interest rate near the repo rate by lending or absorbing funds each day through a corridor of facilities; the MSS and sterilisation deal with liquidity from capital inflows.

    Advanced · 6 min · Full course
  6. 1.6.6Monetary Policy Committee, inflation targeting and lending rate benchmarks (BPLR to EBLR)

    Since 2016 a six-member Monetary Policy Committee sets the repo rate to meet a CPI inflation target of 4 per cent (band 2-6 per cent), and bank loan rates are tied to external benchmarks.

    Advanced · 6 min · Full course

Practise Money and monetary policy. Questions with answers explained, from the same topics.

Practise in the app Indian Economy questions

Medha AI is an independent preparation service. It is not affiliated with, endorsed by or connected to APPSC, TSPSC, MPSC, UPSC or any other commission or government body.