MONETARY POLICY INSTRUMENTS

1. Repo Rate (4%): It is the rate at which the RBI lends money to commercial banks.

2. Reverse Repo Rate (3.35%): It is the rate at which the RBI borrows money from commercial banks.

3. Liquidity Adjustment Facility (LAF):  It is a monetary policy tool which allows banks to borrow money through repurchase agreements. Simply LAF is used to aid banks in adjusting the day to day mismatches in liquidity. LAF consists of repo and reverse repo operation.

4. Marginal Standing Facility (MSF): A facility under which scheduled commercial banks can borrow an additional amount of overnight money from the Reserve Bank by dipping into their Statutory Liquidity Ratio (SLR) portfolio up to a limit at a penal rate of interest. This provides a safety valve against unanticipated liquidity shocks to the banking system.

5. Bank Rate/Discount rate (4.25%): It is the rate of interest which a central bank charges on the loans and advances to a commercial banks.  

6. Cash Reserve Ratio (CRR) (3.5%):  It is the amount of funds that the banks have to keep with the RBI.

7.  Statutory Liquidity Ratio (SLR) (18%): It is the term for reserve requirement for commercial banks in India which they have to maintain in the form of gold, government approved securities before providing credit to the customers.

8. Open Market Operations (OMOs): It refers to a central bank buying or selling short-term Treasuries and other securities in the open market in order to influence the money supply.

9. Market Stabilization Scheme (MSS): Market Stabilization scheme (MSS) is a monetary policy intervention by the RBI to withdraw excess liquidity (or money supply) by selling government securities in the economy