A STUDY ON IMPACT OF MONETARY POLICY ON FINANCIAL MARKETS WITH REFERENCE TO PRIVATE FINANCIAL INSTITUTIONS

Monetary policy plays a significant role in influencing financial markets and the operations of private financial institutions in India. The study indicates that respondents generally possess good awareness of monetary policy and its major instruments, including the Repo Rate, Reverse Repo Rate, CRR, and SLR. The analysis shows that 76% of respondents have a positive view of their monetary-policy awareness, while 76% also recognize their knowledge of RBI policy tools. Furthermore, 75% of respondents agree or strongly agree that monetary policy affects lending activities. These findings support the broader view that changes in interest rates, liquidity conditions, and monetary-policy decisions influence lending, investment behaviour, borrowing patterns, institutional profitability, and financial-market stability. Private financial institutions play an important role in transmitting monetary policy to households, businesses, investors, and other economic participants. Effective liquidity management, interest-rate risk management, technological capability, customer communication, and appropriate lending strategies can improve institutional responses to changing monetary conditions. Overall, the study concludes that effective monetary-policy transmission through private financial institutions is important for maintaining financial stability, supporting investment, improving credit availability, and promoting sustainable economic development in India.

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