A lot is done by FInance ministry also which impacts monetary policy .....though Monetary policy is in the hands of RBI only.....But they both work in close coordination through the instrument of budget
Examples
1...Monetay policies impact bank interest rates---- Finance ministry in the budget gives Interest free loans + subsidized interest schemes to farmers , MSMEs etc
2. Monatary policy reponsible for Inflation mgmt thru various instruments----but Finance ministry also work to manage inflation-----thru exports, imports quotas, contarctionary fiscal or expansionary etc
3. SLR---- provides investments in various bonds, etc etc.......Finance ministry can create or delete these.....
4. Priority sector lending is decided by govt ---- which decided the various portion of loans to various sectors---- banking sector norms.....
Examples
1...Monetay policies impact bank interest rates---- Finance ministry in the budget gives Interest free loans + subsidized interest schemes to farmers , MSMEs etc
2. Monatary policy reponsible for Inflation mgmt thru various instruments----but Finance ministry also work to manage inflation-----thru exports, imports quotas, contarctionary fiscal or expansionary etc
3. SLR---- provides investments in various bonds, etc etc.......Finance ministry can create or delete these.....
4. Priority sector lending is decided by govt ---- which decided the various portion of loans to various sectors---- banking sector norms.....
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