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प्रश्न
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.
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उत्तर
Increasing the lending rate to commercial banks is referred to as increasing the Bank Rate. By increasing the bank rate, the cost of borrowing for commercial banks rises, leading to higher lending costs for businesses and consumers. This reduces the effects of inflation.
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संबंधित प्रश्न
Briefly explain two qualitative methods of credit control adopted by this institution.
The rate of which commercial banks borrow from the Central Bank is the:
Explain how credit rationing helps to control credit in an economy.
During deflation, the Central Bank usually ______.
The central bank controls credit _____ .
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 |
What is meant by open market operations?
The Central Bank is the apex monetary institution of the country. Explain its role of a custodian of foreign exchange reserves.
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.
What do you mean by credit control?
