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RBI role in indian financial market
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1 August, 2013, 6:43 PM
Reserve Bank of India (RBI) is the supreme authority of Indian financial market. so whatever RBI does it is very important for the indian market. RBI Regulates all the financial actions of banking sectors. RBI decides the interest rate, bank rate, repo rate, SLR ratio etc.
RBI creates the balance between inflation and deflation . Inflation means high demand and less supply , deflation means less demant and excess supply both inflation and deflation are bad for the economy and financial market, stock market so RBI monitors the conditions in the economy accordingly decides the interest rates to maintain the economy growth. Stock markets investors and traders closely watch the RBI actions as RBI cuts the interest rate that boost up the sentiment of equity market because it increases the liquidity in the market while higher interest rate demotivate the investors to invest in stock market.
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