eco group 5 central bank ppt
TRANSCRIPT
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CENTRAL BANK
Department of Management studiesSAKEC
Economic Environment of Business
Semester II Prof. Sanchita Chandra
2008-2009
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NIKHIL K. 25
JITESH L.
26
ARCHANA L. 27
KASHYAP M. 28
SAGAR M. 29
ISHA M. 30
GROUP 5
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INTRODUCTIONA universal monetary institute in modern
times
Constitutes the apex of the money structure of an economy.
Acts as the leader of the money market .
Supervises, controls and regulates the activities of commercial banks.
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CENTRAL BANKS
India Reserve Bank of India.
U.S.A. Federal Reserve bank.
U.K. Bank of England.
Pakistan Bank of Pakistan.
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DEFINITION
“Institute charged with the responsibility of managing the expansion and contraction of the volume of money in the interest of the general public welfare.”
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IMPORTANCE !!!!To control credit.
To issue Paper currency.
To iron out economic crisis.
To implement Monetary and financial Policies.
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ESTABLISHMENT OF RBI
Established in April 1935 with a share capital of Rs. 5 crores.
Nationalized in the year 1949. Initially established in Calcutta but
permanently moved to Mumbai in 1937.
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FUNCTIONS OF CENTRAL BANK
MONETARY NON-MONETARY
Issue of Currency Notes
Bankers to Government
Banker’s BankCredit ControllerCustodian of Forex
Reserves
Bank’s SupervisionDevelopment
FunctionsData CollectionResearchClearness
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CREDIT CONTROL MEASURES
GENERAL CREDIT CONTROLS SELECTIVE CREDIT CONTROLS
Bank RateOpen market
operationsCash Reserve RatioStatutory Liquidity
Ratio
Ceiling on CreditMargin
RequirementsDirectivesMoral Suasion
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CURRENT SCENARIOCRR 5%
SLR 24%
Repo Rate 5.5%
Reverse Repo Rate 4%
Inflation 3.92%
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RECESSION?
A decline in a country's gross domestic product (GDP) growth for two or more consecutive quarters of a year. A recession is also preceded by several quarters of slowing down.
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CAUSES & EFFECTSCausesSlow down of normal Economic Cycle.Consumers lose confidence in growth.
EffectsDecreased demand for goods and services.Stock Market tumbles.
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RBI IN RECESSIONCRR cut to 5% Repo rate cut to 5.5%Reverse Repo rate cut to 4%Short-term lending and borrowing rates
cutSlashed tax ratesInjection of MoneyOpening up new borrowing channels for
banksGovernment hikes its spending
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RBI HELPING CORPORATE SECTORRestructuring of NPA’S
Diamond industry
Aviation Sector
NBFC’s , Mutual Funds and Banks
Real estate.
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FEDERAL RESERVE BANK
Central banking system of the United States.
Created in 1913 by the enactment of the Federal Reserve Act.
Mr.Ben Bernanke, current chairman of the Federal Reserve.
A quasi-public (government entity with private components) banking system.
Changes in Fed Funds rate & Discount rate
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CURRENT SCENARIODate
Discount rate
Fed funds rate
Jan – July, 2007 6.25% 5.25%
Dec 11, 2007 4.75% 4.25%
April 30, 2008 2.25% 2.00%
October 29, 2008
1.25% 1.00%
January 16, 2009
0.25% 0.25%
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FEDERAL BANK IN RECESSIONCuts Fed funds rates to 0.25%Cuts Discount rates to 0.25%$250-billion bailout package in Tax CutsHigh spending in Energy & Power A.I.G. sought a $85 billion lifelineTakeover of Fannie Mae and Freddie Mac$75-billion package unveiled by ObamaTALF, a program of $200 billion to support Asset-
backed SecuritiesTARP, a program of $700 billion to insure troubled
assetsTerm Auction Facility
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CONCLUSIONoCentral Bank is not a Profit Hunting
Institution.Profit is its secondary objective.Its Primary function is to stimulate economic growth of the Country.
oIt reveals complete Transperancy, & Prudence in Nations Economy.
oSo it clearly Justifies the Need & Importance of The Central Bank.
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THANK YOU !!!!