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Question
State whether the following statement is TRUE or FALSE.
Credit rationing is quantitative credit control measure of Central bank.
Options
True
False
Solution
Credit rationing is quantitative credit control measure of Central bank. - False
Explanation: Credit rationing is a qualitative method and not a quantitative method. In other words, it affects the direction and flow of credit. Under this, the Central Bank fixes the credit limit for different business activities in the economy. No commercial bank can exceed the prescribed credit limits. The main aim of loan credit rationing is to restrict the flow of credit towards speculative activities.
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