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प्रश्न
Explain how credit rationing helps to control credit in an economy.
Explain how margin money helps to control credit in an economy.
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उत्तर
- Credit Rationing - In this method, the 'Central Bank' imposes restrictions on demand of accommodation for more credits by the commercial banks. The 'Central Bank' limits the credit available to each of the commercial banks. Thus, this method of credit rationing directly affects the credit-granting (lending) capacity of commercial banks.
- Margin money - Margin requirement is a credit management tool utilized by institutions like banks. It represents the collateral amount a borrower must furnish to secure a loan, usually stated as a percentage of the entire transaction value. Implementing a margin requirement allows the lender to control the extent of credit extended to the borrower or trader. To mitigate credit, the RBI can raise the margin requirement.
Notes
Students should refer to the answer according to their questions.
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संबंधित प्रश्न
Define bank rate.
The central bank controls credit _____ .
Which of the following is not 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 |
Give any two reasons as to why a country needs a central bank.
Differentiate between quantitative and qualitative methods of credit control.
Define the following term:
Cash Reserve Ratio.
Explain the following function of the central bank of a country.
Fixation of margin requirement on secured loans.
Who controls the credit supply in an economy?
Identify the following Credit Control measure undertaken by the Central Bank during inflation.
The Central Bank sells government approved securities to the public.
