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How is Rbi Controlling the Commercial Banks? - Economics

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ConceptLiberalisation

Question

How is RBI controlling the commercial banks?

Solution

RBI controls the commercial banks viavarious instruments like Statutory Liquidity Ratio (SLR), Cash Reserve Ratio (CRR), Bank Rate, Prime Lending (PLR), Repo Rate, Reverse Repo Rate and fixing the interest rates and deciding the nature of lending to various sectors. These are those ratios and rates that are fixed by RBI and it is mandatory for all the commercial banks to follow or maintain these rates. All these measures control the commercials banks' operations and also control money supply in Indian economy.

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APPEARS IN

 NCERT Solution for Ncert Class 12 Economics - Indian Economic Development (2019 to Current)
Chapter 3: Liberalisation, Privatisation and Globalisation: An Appraisal
Exercise | Q: 4 | Page no. 53
Solution How is Rbi Controlling the Commercial Banks? Concept: Liberalisation.
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