Question

Match the following with their nearest meanings.

Note:
Min. stands for minimum
Max. stands for maximum

• A. Min. reserve with RBI
• B. Max. credit to be lent
• C. Moral responsibilities
• D. Collateral security

Answer 1

The minimum reserve maintained with the RBI is called the cash reserve ratio.
The RBI persuades the banks to follow their moral responsibilities. This is called moral suasion.
Collateral security is the object that the borrower has to give to the lender for the loan he/she is taking.
The RBI fixes a maximum limit for the credit to be given by the banks. It is called credit rationing or credit ceiling.