A RBI's Monetary Policy and Its Impact on Commercial Banks

The objective of the research is to examine the reserve banks of India (RBI) monetary policy and its effect on the commercial banks financial operations in India, as the national regulator, the RBI adopts a combination of instruments to strike a balance between inflation and the promotion of economic growth, the research starts with the description of the monetary policy and its instruments and explains why it is the backbone of the Indian banking system and financial structure. The core of the research is based on the direct connection between the particular RBI instrument such as Repo Rate, Reverse Repo Rate, Cash Reserve Ratio (CRR), Statutory Liquidity Ratio (SLR), Open Market Operation (OPM), And Day to Day Operations of the Banks. Through the analysis of these connections, the research points out how the slight change in the policy rates can greatly affect the lending capacity and profitability of the banks. Which determines the rate of the economic growth. It goes beyond the simple operation to analyze the ripple effect of the bank’s profitability, liquidity, and stability. Also, the research describes the inflation rate and the borrowing ratio of the commercial Banks.