Advertisements
Advertisements
Question
Bank rate is the rate at which:
Options
Commercial banks purchase government securities from the central bank.
Commercial banks can take loans from the central bank for a short term.
Short-term loans are given by commercial banks.
Commercial bank take loans from the public.
Solution
Short-term loans are given by commercial banks.
Explanation:
The bank rate is the rate at which the central bank lends money to commercial banks on a short-term basis. Changes in the bank rate can affect the cost of borrowing for commercial banks, which in turn influences the interest rates they give their customers.
RELATED QUESTIONS
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:
The difference between the value of security and the amount of loan sanctioned against these securities is known as:
Explain how credit rationing helps to control credit in an economy.
During deflation, the Central Bank usually ______.
The central bank controls credit _____ .
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 |
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): Bank rate is a quantitative instrument of monetary policy.
Reason (R): During inflation, RBI reduces the bank rate.
Define the term Statutory Liquidity Ratio.
State the impact of an increase in Cash Reserve Ratio on loanable funds.
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.
Who controls the credit supply in an economy?
What do you mean by credit control?
Define moral persuasion.
Describe two quantitative credit control measures of the Central Bank.
