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Date Submitted: 05/05/2013 02:40 AM
CREDIT CONTROL MEASURES OF RESERVE BANK OF INDIA Compiled by W.NONGBET
Introduction
Definition: Monetary policy may either be defined in a broad or in a narrow sense. Defined in a broader sense, monetary policy not only includes monetary measures but also non-monetary measures which have monetary effects. In this sense, monetary policy covers a wide range of policies and measures. It includes not only monetary measures which influence the cost and availability of money but also those non-monetary measures which influence monetary situations. Thus, non-monetary measures such as control of
prices or wages, physical control, budgetary measures, income policy measures, etc. would be included within the scope of monetary policy defined in broader sense in so far as their primary aim is to influence the monetary situation.
But, defined in a narrow sense, monetary policy comprises only those decisions and measures of the state and of the monetary authority which affect the volume of money and the level of interest rates. Thus, monetary policy is defined as comprising of such measures which lead to influencing the cost, volume and availability of money and credit so as to achieve certain set objectives.
Monetary policy refers to the Credit Control measures adopted by the central bank of a country. This is a very narrow definition.
But, besides the policies of the central bank, the Government policies relating to the monetary standard and the statutory reserves for the issue of currency as also operations and policies regarding exchange rates and foreign transactions also constitute important aspects of monetary policy. Hence, monetary policy is the name given to the principles whereby the Government and the central bank of a country fulfill the general objectives of the country‘s economic policy. This is as it should be since all the various...