Question
Download Solution PDFWhich of the following is a qualitative measure of credit control used by the Reserve Bank of India?
A) CRR
B) Moral Suasion
C) SLR
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDF- Moral suasion is a qualitative measure of credit control used by the Reserve Bank of India.
- It is a persuasive technique used by the central bank to influence the behavior of the commercial banks.
- The RBI uses moral suasion to encourage banks to comply with the policy guidelines and regulations issued by the central bank.
- It is a non-binding measure and relies on the reputation and credibility of the RBI to convince the banks to follow the desired course of action.
- Other measures of credit control used by the RBI include quantitative measures such as CRR (Cash Reserve Ratio) and SLR (Statutory Liquidity Ratio).
Additional Information
- CRR (Cash reserve ratio) is the percentage of deposits that banks are required to keep with the RBI as a reserve.
- It is a quantitative measure of credit control as it directly affects the liquidity and lending capacity of the banks.
- SLR (Statutory Liquid Ratio) is the percentage of deposits that banks are required to invest in specified securities such as government bonds.
- It is also a quantitative measure of credit control as it restricts the funds available for lending by the banks.
Last updated on May 28, 2025
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