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प्रश्न
Describe two quantitative credit control measures of the Central Bank.
Briefly discuss any two quantitative measures adopted by the Reserve Bank of India to control credit.
Explain the 'open market operations' method of credit control used by a central bank.
Briefly explain the quantitative credit control policy of the central bank.
Explain the following measures adopted by the central bank to control inflation.
- Bank rate
- Open market operations
Explain how bank rate and open market operations can be used by the central bank to control credit.
उत्तर
Quantitative credit control measures of the Central Bank are as follows:
- Bank Rate: The Central Bank RBI controls through changes in its bank rate. An increase in bank rate increases the cost of borrowing from the central bank. It forces the commercial banks to increase their lending rates, which discourages people from taking loans from banks.
- Open Market Operations: The Central Bank RBI controls credit through its open market operations. Under it, the central bank buys or sells the government securities in the open market. Sale of securities by central bank reduces the reserves of commercial banks, which adversely affects bank's ability to create credit. And purchase of securities from the open market increases the resources of banks and hence their lending capacity.
Notes
Students should refer to the answer according to their questions.
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संबंधित प्रश्न
Briefly explain two qualitative methods of credit control adopted by this institution.
Define qualitative credit control policy of the RBI.
The central bank controls credit _____ .
The process of buying and selling of securities by the central bank of a country is known as ______.
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 :
During inflation, the central bank usually:
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.
Differentiate between quantitative and qualitative methods of credit control.
Define the following term:
Margin Requirements.
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 is this policy called that controls the credit supply in an economy?
Identify the following Credit Control measure undertaken by the Central Bank during inflation.
The Central Bank sells government approved securities to the public.
What do you mean by credit control?
Which are qualitative methods of credit control?
What is meant by Legal Reserve Ratio?
Define moral persuasion.
