BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Which one of the following tools is used by RBI for selective credit control?
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It advises banks to lend against certain commodities
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It advises banks to recall the loans for advances against certain commodities
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It advises banks to charge higher rate of interest for advance against certain commodities.
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It discourages certain kinds of lending by assigning higher risk weights to loans it deems undesirable.
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Explanation:
Detailed explanation-1: -Bank rate is the selective credit control measure used by the central bank of the country.
Detailed explanation-2: -Credit rationing is a selective qualitative credit control method.
Detailed explanation-3: -Rationing of credit is a selective method adopted by the central bank for controlling and regulating the purpose for which credit is granted or allocated by commercial banks.
Detailed explanation-4: -The important qualitative or selective methods of credit control are; (a) Marginal Requirements, (b) Regulation of Consumer Credit, (c) Credit Rationing, (d) Moral Suasion and (e) Direct Action. Quantitative or General Methods: 1. Bank Rate: It is the also known as the discount rate.
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