Rbi - how does it maintains price stability?
This query is : Resolved
Pratik Shah
(Querist)
21 December 2012
When Price increases in Market from Rs.100 to Rs. 150, to stabilize the Price if RBI increases Interest Rates,than How do money flows from banks to the market slowing down as money becomes more expensive and people reduce borrowing from Banks?
Can you explain it with a suitable example?
Can you explain it with a suitable example?
Pankaj Gupta
(Expert)
21 December 2012
When RBI increases the interest rate, loan becomes more dear. Because banks have to increase their landing rate. As a result of which people take loan for important work only. While they shift their other demands like car etc for future when the loan becomes cheaper.
As a result of dearer loan, less fund flows from banks to market. Thus people starts spending very wisely and on their necessities only and not on their wants which can be shifted to future when loan becomes cheaper.
As a result of dearer loan, less fund flows from banks to market. Thus people starts spending very wisely and on their necessities only and not on their wants which can be shifted to future when loan becomes cheaper.
Message likes :
1 times
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- EPF ECR NEW FILE SEP 17TH 2026
- Non filing of I T Returns
- TDS on Fixed Assets purchased
- IMPORT PURCHASE ENTRY PASSED IN BOOKS OF ACCOUNT
- Under marginal scheme
- GST on Renting godown to KFCSC for Storage of Raagi
- TAX AUDIT ON PROFESSIONAL INCOME
- How to Handle Active E-Invoices in GST Portal Deleted from Tally?
- Clarification Requested: Gift → NRO → NRE → Overseas Transfer - USA/CANDA (FEMA & Tax Compliance)
- Utilisation Fy 25-26 TDS challans in Fy 26-27 TDS Return
- FAST DS 26 Undisclosed Foreign Asset Disclosure Scheme 2026
- Regime change
- Goods sold but invoice not issued
- Tally: Imported bank entries do not show up in manual reconciliation
- Sales of goods of amount Rs97 lakhs to a party
- Confused About My Career After 12th — Cyber Security, AI or Finance? Need Guidance
- FAST-DS 2026 Under Tax Law - No recourse or support for person declaring via this scheme?
- Guidance Needed: Linking Multiple Form 26QB Payments and Responding to ITD Defaulter Notice
- How to pay remaining amount of TDS after due date?
- Resigning a auditor from the company for misconduct
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
