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Question
Which of the following is a selective/qualitative method of credit control.
Options
Bank Rate
Cash Credit Ratio
Open Market Operations
Moral suasion
Solution
Moral suasion
Explanation:
The Central Bank employs a qualitative form of credit regulation known as moral suasion. It refers to the counsel, suggestions, and persuasion that the Central Bank uses to persuade member banks to obey its, directives to restrict credit supply. The RBI is making a moral appeal to commercial banks, encouraging them to refrain from certain types of loan operations.
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