Effects of CRR Rate and Repo Rate on Various Economic Variables

Abstract

The present Monetary Policy of our country has been set against a rather complex economic backdrop. Although the situation is more reassuring than it was a year ago, uncertainty about the shape and pace of global recovery persists. The economy is recovering rapidly from the growth slowdown but inflationary pressures, which were triggered by supply side factors, are now developing into a wider inflationary process. As the domestic balance of risks shifts from growth slowdown to inflation, the policy stance of Reserve Bank of India had recognized and responded to this transition. In the present study, an attempt has been made to ascertain the impact of changes in the CRR rate and Repo rate on bank’s credit standard as applied to the approval of loans to the households as well as business enterprises