RBI's tools to add or absorb short-term money in the banking system, mainly through repo, reverse repo and the SDF.
Related terms in RBI & monetary policy
Bank Rate
The rate at which RBI lends to banks for the long term without buying bills from them. It is now kept at the same level as the MS…
Cash Reserve Ratio (CRR)
The share of a bank's net demand and time liabilities that it must keep as cash with RBI. RBI pays no interest on it.
Corridor (policy rate corridor)
The band between the floor (SDF rate) and ceiling (MSF rate) within which the overnight call money rate moves. The repo rate sits…
CPI inflation target
The government, after consulting RBI, sets the inflation target that the MPC must aim for. It is 4% CPI inflation with a band of …
Fixed rate reverse repo
The rate at which RBI absorbs money from banks against government securities. Since April 2022 it is no longer the floor of the c…
Marginal Standing Facility (MSF)
An emergency window where banks can borrow overnight from RBI, even by dipping into their SLR holdings, at a rate above repo. It …
Monetary Policy Committee (MPC)
A six-member committee that sets the repo rate. Three members are from RBI, including the Governor who has a casting vote, and th…
Monetary policy stance
RBI's signal of the likely direction of rates: accommodative (towards cuts), neutral, or tight (towards hikes).
Narrow and broad money (M1, M3)
Measures of money supply. M1 is currency with the public plus demand deposits. M3, or broad money, adds time deposits with banks.
NDTL
Net Demand and Time Liabilities. A bank's deposits and certain other liabilities, minus some items. CRR and SLR are calculated as…