The affiliation between Banking and Inflation

Amazing one....keep going..

Factors like rates of import and export, the production cost of farms, value of dollar, price of oil (crude oil), market movements of other overseas markets cause global liquidity. In India, we can also feel the effects of global liquidity. We are not isolated from all these issues now. Due to the remarkable economic growth of India over the recent years, increase in foreign currency inflow caused the demand in multiples for many Merchandise and services in India. RBI (Reserve Bank of India) needs to control this excess liquidity in our economic system. For this, RBI increases the “Repo rates” which makes “Costly Credits” and thus increases the CRR rate (Cash Reserve Ratio). This kind of measures by RBI can only control the inflation to a certain extent only

anyway...thanx for nice artical

Very nice explanation in simple form...................Keep sharing bro

  @ Vicky : Hay bro a big thank for needful value addition.

 Stagflation is a combination of stagnation and inflation – the economy stagnates so incomes come down, but prices keep going up, making the income drop even harsher.

NICE ONE BROTHER......... KEEP SHARING...............BOOKMARKED

  @ aditya : Thanks for Noticing my post bro.

@ Mansha : thanks for motivating comment.

@ Hardik : Thanks for Beautiful comment bro, am happy that its helping you to gain knowledge regarding inflation n interest rates.

@ Sneha Kinjal,Lakshmi, Vajli, Gopal.saurab,aditya ayan,yamini Niveditha : thanks for the indeed comments.

@ Vicky : Hay bro, a big thank for needful value addition..

@ resham : hay really I cant believe this, glad to know that its useful.hehe lets see next time,.

@ deepak : Thanks for d precious value addition.

@ krish & Raghu : Thanks for d needful comments  bro.

@ Mr jha : Thanks dear. 

Really very good article......keep sharing......:)

The topic is very nice and it throws light on APPLIED ECONOMICS.

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Pure language of Economics is not so interesting. When it is linked with some live technical issues, it becomes interesting and easy to understand. 

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1. Our RBI is one of the best in the world in all respect of its working.

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2. A small increase in CRR ( Cash Reserve Ratio), puts a pressure on the Banks to retain more cash in hand.

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3. A small increase in Repo Rate affects the advance loans by the banks.

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4. Higher the cost of capital; higher the cost of manufacturing.

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5. Higher the manufacturing cost; lesser the public to purchase it.

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6. Example : When cost of mobile instrument was very high; few people were there to afford it. When cost came down due to mass production, people used to avail more.

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7. If inflow of money is high; inflation will increase. 

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8. If a person invests his money in such a way that its RETURNS  beat the inflation; then only it is practically works for the investor. Otherwise PURCHASING POWER OF MONEY would be low in near future. 

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Example : 

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1. Suppose 4 years back the price of 10 gms Gold   was   Rs. 10,000 .

2. After four years , it is Rs.20,000.

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If a person had put his money in Bank FDR for 10%,( assumed as very attractive when it was invested)  he will be unhappy now with the returns because his value of investment has practically decreased. 

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clear explanation!!!thnks!!