IMPERATIVE

S OF RBI
DEALING WITH INFLATION
Submitted to:
Davinder Suri
MADE BY-
Juhi Kedia 16BSP1092
Chirag Parmar 16BSP0680
Chirag Goyal 16BSP0677
Gaurav Bassi 16BSP0866
Jainam Punamiya 16BSP1041
Piyush Shah 16BSP1696
Khushi Vaishnav 16BSP1179
Khushboo Avlani 16BSP1173
Jivesh Parihar 16BSP1083
Jainam Shah 16BSP1039
Nikhil Chandrashekar 16BSP1530
INTRODUCTION
 POST INDEPENDENCE
EVENTS

In 1949, RBI was nationalized- functioned as state-

owned and state-controlled.
In 1949, Banking Regulation Act led to conferring on
the central bank the vast power to control
commercial banks,
In 1960, policy of reconstruction/complusory
amalgamation of banks to consolidate banking
sector,
In 1973, Oil shock led to introduction of Foreign
Exchange Regulation Act.
Continue.
In 1985, Chakarvartys Committee recommendations, a
flexible monetary targeting approach.
In 1987, Vaghuls committee recommendations ,
money market reforms
In 1991, Narasimhams committee pointed out high
CRR reduced profitability of banks.
In 1997, historic memorandum between RBI and
Government.
In 2000, LAF was introduced to modulate short-term
liquidity and signaling interest rates in overnight
market.
RBI GOVERNORS
[1997-2013]
 AGENDA FOR RAGHURAM RAJAN

Raghuram rajan was appointed as the 23 rd governor of

the RBI on September 04,2013

Steps taken to stop rupees fall

Reduced short term interest rate
Swap window
Allowed banks to borrow
External factor
INDIAS STUBBORN
INFLATION
 CURRENT ACCOUNT DEFICIT

The main reason for Rupees decline

Estimation for 2013-2014 : USD 56 Billion ( 3% of the
GDP)
Causes for widening Current Account Deficit
The Wharton Report
 THE SAVIOR OF INDIAS
ECONOMY?

There were a lot of expectations that Rajan

would tackle the most serious economic
problems.
The biggest challenge before Rajan was not to
get labelled as Indias savior, because The
countrys economic future was largely in the
hands of its government, not its central bank.
MEASURES FOR BANKS, NON-
BANK FINANCIAL COMPANIES

Foreign banks setting up wholly owned subsidiaries

were given near-national treatment in mid-November
2013
Initial minimum paid-up voting equity capital for
foreign banks to be USD 5 billion.
Draft report on Basel-3 capital framework was likely
on November 2013
He RBI to issue updated guidelines on stress testing
for banks by Nov-13.
CONTINUE

Banks were given the option to pay interest on

savings and term deposits at intervals shorter han
quarterly time-frames.
Guidelines on restructuring for non-bank finance
companies were issued on nov-13.
 MEASURES FOR MARKETS,
LIQUIDITY
To issue Retail Inflation Indexed Securities in
November/December 2013
To launch 10-year Interest Rate Future Contracts by
Dec 2013
To allow partial credit enhancement by corporate
bonds by bank
To close special repo window for mutual fund with
immediate effect
 CURRENT SCENARIO
Urjit R Patel became the 24 th Governor of Reserve
Bank Of India on 4th September 2016.
On 8th November 2016 Government and RBI
announced Demonetisation.
He urged the people to start using cash substitutes
for a cashless economy.
Post Demonetisation
short term affect on Gross Domestic Product (GDP)
RBI cutting interest rates in Nov 2016
Now to maintain the Inflation target of 4 per cent
 OPTIMAL POLICY RESPONSE

Temporary or Permanent

Supply or Demand

Consumption or Investment