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प्रश्न
Explain the following function of the central bank of a country.
Fixation of margin requirement on secured loans.
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उत्तर
- A country's central bank decides the margin requirement for secured loans as part of its credit control system. This is the percentage of the collateral's value that a borrower must provide as security for a loan.
- The central bank can limit the quantity of credit available to borrowers by adjusting the margin requirement.
- A greater margin requirement requires borrowers to produce more collateral, restricting the amount they can borrow.
- This enables the central bank to control the flow of credit in the economy, affecting inflation, consumption, and investment.
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संबंधित प्रश्न
Briefly explain two qualitative methods of credit control adopted by this institution.
Explain how credit rationing helps to control credit in an economy.
The central bank controls credit _____ .
______ is a quantitative method of credit control.
Bank rate is the rate at which:
The process of buying and selling of securities by the central bank of a country is known as ______.
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 |
Which of the following statements are correct and which are incorrect? Give reasons.
- Central bank is a currency authority.
- Bank rate is a qualitative method of credit control.
- Quantitative methods regulate direction of credit.
- Bank rate is the rate at which commercial banks give loans to the public.
- Central bank should sell government securities when credit is to be expanded.
Identify the following Credit Control measure undertaken by the Central Bank during inflation.
The Central Bank sells government approved securities to the public.
What do you mean by credit control?
