RBI is the Reserve Bank of India or you can say mother of all Indian banks. RBI has a Hugh impact not just only on sharemarket but also on Indian economy. RBI is the strength of Indian economy since Indian freedom. India is the most safe place to invest, Hugh role belongs to RBI.
Why RBI has a great impact? reasons are the policies, Monetary policy and Fiscal policy. RBI's monetary policy is the world's one of the greatest policy, they have a fine hold on supply of money. Monetary policy which decide the interest rate and borrow rate.
2008 global crisis, it was the most disappointment of the world economy, The famous bank Lehman brothers was collapsed due to their Monetary policy and it affected the American economy including the federal reserve bank (FED) of US. US is the most demanded country and they had started to get their money back from all other markets like European Markets, Asian Markets, etc,. Result is the global crisis but that time due to RBI policy Indian economy was recovered in next six months.
In European Union, the Monetary policy is the same for 27 countries but they have a different fiscal policies, Germany's impact is high in European market and thus the other countries got the borrowing money on very low interest rates on German credit card, and thus Greece was almost default. European central bank has suffered a lot.
I am not going in much depth on world crisis or Greece crisis, they itself are the potential topics. Just mentioned them to explain you the impact of central bank's role in any country's economy. another things are Repo rate and Cash reserve ration (CRR). Repo rate is the rate at which central bank of a country grants money to other Indian banks while CRR is the cash reserve ratio is a minimum fraction of the total deposits of customers, which other Indian banks have to hold in cash or as a deposits in central bank.
Now how to earn money from impact of RBI, first you need to read the country's economy, how the things are going on in India. every three months RBI governor decide or give statement on weather changes the Monetary policy or not. it always depending on quarter result and overall impact of global as well as domestics. We have to judge that rate cut is possible or not, if rate cut happens then it always useful for the country's economy. The moment you read Indian economy and you are more then 90% sure that money is going to invest in India you can enter as a Trader or Investor.
If the rate cut is useful then why RBI couldn't decrease every three months? Big reason is that RBI have some limitations in rate cut because India is highly inflated market, RBI's first role is to settle the inflation first and then they can think about money flow. India is a highly populated nation and there are very poor people too, thus they can not change or decrease rate cut so easily. Also they have to manage CAD (Current account deficit) and fiscal deficit, Fiscal deficit is belongs to gov. who collect money by tax and spend money by using money from Tax. Mostly Indian people are not paying their Tax regularly and thus country has to suffer with fiscal deficit and it creates the overall impact on nation, including politicians' or industrialists' scam . India's current account deficit is always high because India's exports are very low as compare to imports. So these are such reasons why RBI can not easily change their policies.
Why RBI has a great impact? reasons are the policies, Monetary policy and Fiscal policy. RBI's monetary policy is the world's one of the greatest policy, they have a fine hold on supply of money. Monetary policy which decide the interest rate and borrow rate.
2008 global crisis, it was the most disappointment of the world economy, The famous bank Lehman brothers was collapsed due to their Monetary policy and it affected the American economy including the federal reserve bank (FED) of US. US is the most demanded country and they had started to get their money back from all other markets like European Markets, Asian Markets, etc,. Result is the global crisis but that time due to RBI policy Indian economy was recovered in next six months.
In European Union, the Monetary policy is the same for 27 countries but they have a different fiscal policies, Germany's impact is high in European market and thus the other countries got the borrowing money on very low interest rates on German credit card, and thus Greece was almost default. European central bank has suffered a lot.
I am not going in much depth on world crisis or Greece crisis, they itself are the potential topics. Just mentioned them to explain you the impact of central bank's role in any country's economy. another things are Repo rate and Cash reserve ration (CRR). Repo rate is the rate at which central bank of a country grants money to other Indian banks while CRR is the cash reserve ratio is a minimum fraction of the total deposits of customers, which other Indian banks have to hold in cash or as a deposits in central bank.
Now how to earn money from impact of RBI, first you need to read the country's economy, how the things are going on in India. every three months RBI governor decide or give statement on weather changes the Monetary policy or not. it always depending on quarter result and overall impact of global as well as domestics. We have to judge that rate cut is possible or not, if rate cut happens then it always useful for the country's economy. The moment you read Indian economy and you are more then 90% sure that money is going to invest in India you can enter as a Trader or Investor.
If the rate cut is useful then why RBI couldn't decrease every three months? Big reason is that RBI have some limitations in rate cut because India is highly inflated market, RBI's first role is to settle the inflation first and then they can think about money flow. India is a highly populated nation and there are very poor people too, thus they can not change or decrease rate cut so easily. Also they have to manage CAD (Current account deficit) and fiscal deficit, Fiscal deficit is belongs to gov. who collect money by tax and spend money by using money from Tax. Mostly Indian people are not paying their Tax regularly and thus country has to suffer with fiscal deficit and it creates the overall impact on nation, including politicians' or industrialists' scam . India's current account deficit is always high because India's exports are very low as compare to imports. So these are such reasons why RBI can not easily change their policies.
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