Which of the following is a qualitative measure of credit control used by the Reserve Bank of India?

A) CRR

B) Moral Suasion

C) SLR

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SSC CHSL Exam 2023 Tier-I Official Paper (Held On: 02 Aug, 2023 Shift 2)
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  1. Only A
  2. Only B
  3. Both B and C
  4. Only C

Answer (Detailed Solution Below)

Option 2 : Only B
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SSC CHSL Exam 2023 Tier-I Official Paper (Held On: 02 Aug 2023 Shift 1)
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Detailed Solution

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The correct answer is Moral Suasion.
Key Points
  • 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.
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