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Question
Which of the following is not a quantitative method of credit control?
Options
Open market operation
Margin requirements
Variable reserve ratio
Bank rate policy
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Solution
Margin requirements
Explanation:
Margin requirements are a qualitative approach to credit control. They refer to the difference between the value of the collateral (security) and the loan amount approved, which is used to control the flow of credit to specified sectors or objectives.
RELATED QUESTIONS
Define bank rate.
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:
The difference between the value of security and the amount of loan sanctioned against these securities is known as:
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 |
Observe the relationship of the first pair of words and complete the second pair.
Quantitative method of credit control by the central bank : Bank rate.
Quantitative method of credit control by the central bank :
Give any two reasons as to why a country needs a central bank.
What is meant by open market operations?
Define the following term:
Cash Reserve Ratio.
Define the following term:
Margin Requirements.
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?
What do you mean by credit control?
Which are qualitative methods of credit control?
What is meant by Legal Reserve Ratio?
Define moral persuasion.
Give an example of margin requirements.
