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प्रश्न
Briefly explain two qualitative methods of credit control adopted by this institution.
Explain any three methods of qualitative credit control.
उत्तर
The methods used by the RBI to influence the flow of credit in particular directions of the economy are called qualitative methods. The two qualitative methods of credit control are as follows:
- Margin Requirements: A margin is the difference between the amount of the loan and the market value of the security offered by the borrowers against the loan. By changing the margin requirement, the central bank can alter the amount of loans made against securities by the banks.
- Rationing of Credit: Rationing of credit means fixation of credit quotas for different sectors of the economy.
- Moral Suasion: Under this method, the central bank adopts the policy of persuasion and moral influence on the commercial banks in order to get them to fall in line with its policy. The central bank frequently announces its policy and urges the commercial banks to adopt it.
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संबंधित प्रश्न
Which of the following is a selective/qualitative method of credit control.
The rate of which commercial banks borrow from the Central Bank is the:
Explain how credit rationing helps to control credit in an economy.
______ is a quantitative method of credit control.
In order to encourage investment in the economy, the central bank may ______.
Bank rate is the rate at which:
Match the following and select the correct option:
| Column A | Column B | ||
| (i) | A rate of interest at which the central bank (RBI) lends money to member commercial banks to meet they long term needs. | A. | Cash Reserve Ratio |
| (ii) | A rate of interest at which RBI lends money to commercial banks to meet their short term needs. | B. | Statutory liquidity ratio |
| (iii) | A minimum percentage of total deposits kept by banks with the Central Bank. | C. | Repo rate |
| (iv) | A minimum percentage of total deposits to be kept by banks inform of liquid assets with themselves. | D. | Bank rate |
Observe the relationship of the first pair of words and complete the second pair.
Quantitative method of credit control by the central bank : Bank rate.
Quantitative method of credit control by the central bank :
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.
Give any two reasons as to why a country needs a central bank.
Differentiate between quantitative and qualitative methods of credit control.
Define the following term:
Cash Reserve Ratio.
Define the following term:
Margin Requirements.
Briefly explain the following credit control method adopted by the Central Bank.
Publicity
Briefly explain the following credit control methods adopted by the Central Bank.
Moral persuasion
Which of the following statements are correct and which are incorrect? Give reasons.
- Central bank is a currency authority.
- Bank rate is a qualitative method of credit control.
- Quantitative methods regulate direction of credit.
- Bank rate is the rate at which commercial banks give loans to the public.
- Central bank should sell government securities when credit is to be expanded.
What do you mean by credit control?
Describe two quantitative credit control measures of the Central Bank.
