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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.
Describe the various methods employed by a central bank to control credit in an economy.
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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 a central bank reduces the reserves of commercial banks, which adversely affects a 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.
Which of the following is a selective/qualitative method of credit control.
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.
______ is a quantitative method of credit control.
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 |
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 :
Give any two reasons as to why a country needs a central bank.
Define the following term:
Margin Requirements.
Briefly explain the following credit control methods adopted by the Central Bank.
Moral persuasion
Central bank is the lender of the last resort. Explain.
The Central Bank is the apex monetary institution of the country. Explain its role of a custodian of foreign exchange reserves.
What is this policy called that controls the credit supply in an economy?
Identify the following Credit Control measures undertaken by the Central Bank during inflation.
The Central Bank increases the rate at which it lends to the Commercial Bank.
Which are qualitative methods of credit control?
Define moral persuasion.
