<P> Loan to Value is the ratio of loan amount to the actual value of asset purchased . RBI regulates this ratio so as to control the amount bank can lend to its customers . For example, if an individual wants to buy a car from borrowed money and the car value is Rs. 10 Lac, he can only avail a loan amount of Rs. 7 Lac if the LTV is set to 70% . RBI can decrease or increase to curb inflation or deflation respectively . </P> <P> Under this measure, RBI can specifically instruct banks not to give loans to traders of certain commodities e.g. sugar, edible oil etc . This prevents speculations / hoarding of commodities using money borrowed from banks . </P> <P> Under this measure RBI try to persuade bank through meetings, conferences, media statements to do specific things under certain economic trends . For example, when RBI reduces repo rate, it asks banks to reduce their base rate as well . Another example of this measure is to ask banks to reduce their Non-performing assets (NPAs). </P> <P> In developing countries like India, Monetary Policy fails to show immediate or no results because of below factors: </P>

Function and power of reserve bank of india