Credit Requirement In India: a Study About Monetary Policy

The role of money markets and monetary policy in India

Abstract

Money markets facilitate the conduct of monetary policy in a country.The development of money market in India in the last few years has beenfacilitated by some major factors. It permitted a gradual de-emphasis on cashreserve ratio as a monetary policy instrument and the development of an arrayof instruments of indirect monetary control, such as, the Bank Rate and theLiquidity Adjustment Facility (LAF). The monetary policy is often, shaped bydevelopments in the money and the foreign exchange markets.