GK
BANKING AWARENESS AND SEBI
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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freezes the bank rate
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raises the bank rate
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reduces the bank rate
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none of these
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Detailed explanation-1: -It is the duty of the RBI to control the credit through the CRR, repo rate, and open market operations. As the bankers’ bank, the RBI facilitates the clearing of cheques between the commercial banks and helps the inter-bank transfer of funds. It can grant financial accommodation to schedule banks.
Detailed explanation-2: -An increase in repo rate increases the costs of borrowing from the central bank. It forces the commercial banks to increase their lending rates, which discourages borrowers from taking loans. It makes the credit costly for the general public and reduces the availability of credit.
Detailed explanation-3: -The RBI Act states monetary policy as the employment of financial instruments under its control to standardise magnitudes such as credit availability, interest rates, and money supply to attain the ultimate goal of economic policy.