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Question
Which of the following is not a quantitative method of credit control?
Options
Open market operation
Margin requirements
Variable reserve ratio
Bank rate policy
Solution
Margin requirements
Explanation:
Margin requirements are a qualitative approach to credit control. They refer to the difference between the value of the collateral (security) and the loan amount approved, which is used to control the flow of credit to specified sectors or objectives.
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| Column A | Column B | ||
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| (iv) | A minimum percentage of total deposits to be kept by banks inform of liquid assets with themselves. | D. | Bank rate |
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- Central bank should sell government securities when credit is to be expanded.
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