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Question
The difference between the value of security and the amount of loan sanctioned against these securities is known as:
Options
Credit rationing
Margin requirement
Direct Action
Regulation of consumer credit
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Solution
Margin requirement
Explanation:
The disparity between the security's value and the approved loan amount against said securities is referred to as margin requirements. This serves as one of the qualitative instruments for credit control employed by the central bank.
RELATED QUESTIONS
The rate of which commercial banks borrow from the Central Bank is the:
Explain how credit rationing helps to control credit in an economy.
______ is a quantitative method of credit control.
Bank rate is the rate at which:
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 |
Define the following term:
Cash Reserve Ratio.
Briefly explain the following credit control method adopted by the Central Bank.
Publicity
What is the credit supply policy in an economy called?
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.
What is meant by Legal Reserve Ratio?
