Objectives of Demonetisation :
(i) Removing Black Money from the country.
(ii) Stopping of corruption.
(iii) Stopping terror funds.
(iv) Curbing fake note

The IFCI does the following functions
(i) Providing long-term loans in rupees and foreign currencies.
(ii) Underwriting of equity, preference and debenture issues.
(iii) Subscribing to equity, preference and debenture issues.
(iv) Guaranteeing the deferred payments for machinery imported from abroad or purchased in India
(v) Guaranteeing of loans raised in foreign currency from foreign financial institutions.

1) NABARD acts as a refinancing institution for all kinds of production and investment credit to agriculture, small-scale industries, cottage and village industries, handicrafts, rural crafts and real artisans to promote integrated rural development.
2) It provides short-term, medium term and long-term credit to state co-operative Banks, RRBs, LDBs and other financial institutions approved by RBI.
3) NABARD gives long-term loans (20 Years) to State Government to enable them to subscribe to the share capital of co-operative credit societies.
4). It gives long-term loans to any institution approved by the Central Government or contribute to the share capital or invests in securities of any institution concerned with agriculture and rural development.
5) NABARD co-ordinates the activities of Central and State Governments, Planning Commission and all India and State level institutions entrusted with the development of small scale industries, village and cottage industries, rural crafts, industries in the tiny and decentralized sectors
6) It has the responsibility to inspect RRBs and CO-operative banks, other than primary co-operative societies.
7) It maintains a Research and Development Fund to promote research in agriculture and rural development

Quantitative methods
1) Bank Rate Policy:
(i) It is the rate at which the Central Bank rediscount the first class.
(ii) The bank advances loans on approved securities to its member banks.
(iii) If the Central Bank wants to control credit, it will raise the bank rate.
(iv) So deposit rate and other lending rates rise, borrowing is discouraged.
2) Open Marker Operation:
(i) The Central Bank purchases and sells Government securities in the money market.
(ii) When banks or public buy these securities they have to pay to the Central Bank.
3) Variable Cash Reserves Ratio:
(i) The Central Bank controls credit by changing the Cash Reserve Ratio.
(ii) If Commercial Banks have excessive cash reserves and create too much credit, the central bank will raise the CPR.
(iii) If CRR is high, commercial bank's capacity to create credit will be less.
Qualitative Methods
1) Rationing of Credit:
(i) It controls and regulates the purposes for which credit is granted by commercial banks.
(ii) It is of 2 types - variable portfolio ceiling and variable capital asset ratio
2) Direct Action:
(i) Direct action is taken against erring banks
3) Moral Suasion:
(i) Central Bank gives advice, then requests and persuades the Commercial Banks to co-operate with the Central Bank in implementing its credit policies.
4) Publicity:
(i) A policy can be effectively successful only when an effective public opinion is created in its favour.
5) Regulation of Consumer's Credit:
(i) The down payment is raised and the number of installments reduced for credit sale.
6) Changes in the Marginal Requirements on Security Loans:
(i) The margin requirements can be increased to prevent excessive use of credit for stock exchange speculation

(i) A non-banking financial institution or company is a financial institution that does not have a full banking license or is not supervised by the central bank.
(ii) They receive deposits and give loans.
(iii) They mobilize people's savings and use the funds to finance expenditure on investment activities.
(iv) The undertake borrowing and lending in the money and capital markets.
(v) They are classified into Stock Exchange and Other Financial institutions.
(vi) Under other financial institutions come Finance Companies, Finance Corporations, Chit Funds, Building Societies, Issue Houses, Investment Trusts, Unit Trusts and Insurance Companies.

1. Credit Creation means the multiplicátion of loans and advances.
2. Every loan creates its own deposits.
3. It is assumed that all banks are obliged to keep the ratio between cash and its deposits at a minimum of 20 %.
4. The banks do not keep any excess reserves.
5. There are no drains in the supply of money.
6. Now, when a customer deposits Rs.1000 in a bank, the bank creates a deposit of Rs.1000 in his favour.
7. Bank deposits have increased by Rs.1000.
8. It is required to keep only a cash reserve of 20 %, i.e. Rs.800 is excess cash reserve.
9. The bank lends out this Rs.800 to the public.
10. The debtor deposits this money with another bank B.
11. Bank B is creating a deposit of Rs.800.
12. Bank B has also excess cash reserve of Rs.640.
13. It could in turn, lend out Rs.640.
14. The total deposits will now grow into Rs.1000 + 800 + 640 +........ till ultimately the excess cash reserve ends.
15. When this stage is reached, the total of the above will be Rs.5000.
16. Money Multiplier \( \frac{1}{20 \%}=\frac{1}{20} \times 100=5\)
Credit creation = 1000 x 5 = Rs.5000