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प्रश्न
Explain how credit rationing helps to control credit in an economy.
Explain how margin money helps to control credit in an economy.
उत्तर
- Credit Rationing - In this method, the 'Central Bank' imposes restrictions on demand of accommodation for more credits by the commercial banks. The 'Central Bank' limits the credit available to each of the commercial banks. Thus, this method of credit rationing directly affects the credit-granting (lending) capacity of commercial banks.
- Margin money - Margin requirement is a credit management tool utilized by institutions like banks. It represents the collateral amount a borrower must furnish to secure a loan, usually stated as a percentage of the entire transaction value. Implementing a margin requirement allows the lender to control the extent of credit extended to the borrower or trader. To mitigate credit, the RBI can raise the margin requirement.
Notes
Students should refer to the answer according to their questions.
APPEARS IN
संबंधित प्रश्न
Briefly explain two qualitative methods of credit control adopted by this institution.
The central bank controls credit _____ .
Read the following statements - Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): Increase in cash reserve ratio adversely affects the capacity of commercial banks to create credit.
Reason (R): An increase in cash reserve ratio reduces the excess reserves of commercial banks and hence limits their credit creating power.
Define the term Statutory Liquidity Ratio.
Briefly explain the following credit control methods adopted by the Central Bank.
Moral persuasion
Central bank is the lender of the last resort. Explain.
Explain the following function of the central bank of a country.
Fixation of margin requirement on secured loans.
What is this policy called that controls the credit supply in an economy?
What do you mean by credit control?
What is meant by Legal Reserve Ratio?
