BANKING AFFAIRS

Detailed explanation-1: -Moral Suasion is not quantitative credit control instrument of credit control. Moral Suasion implies persuasion and request made by the Central Bank to the Commercial Banks to cooperate with the general monetary policy of the former.

Detailed explanation-2: -Margin requirements is not a quantitative credit control tool of RBI.

Detailed explanation-3: -Explanation: The RBI controls the money supply in the economy through quantitative and qualitative tools. Under Quantitative measures money supply is controlled through tools like CRR, or bank rate or open market operations. Under qualitative measures, tools such as moral suasion, margin requirement, etc.

Detailed explanation-4: -Qualitative tools include persuasion by the Central bank in order to make commercial banks discourage or encourage lending which is done through moral suasion, margin requirement, etc. Hence, it is clear that the Margin requirement of loan is not a quantitative instrument for credit control by the Central Bank.

Detailed explanation-5: -Methods of Credit Control (1) Quantitative Methods: (i) Bank rate fixation; (ii) Open market operations; (iii) Change in cash reserves ratios; (iv) Repos and reverse repos; and (v) Statutory liquidity ratio.