On which one of the following measures of credit control for maintaining price stability during the last ten years or so has the Reserve Bank of India placed the greatest reliance?
A
The Bank Rate
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B
Open Market Operations
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C
Cash Reserve Requirnments
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D
Statutory Liquidity Requirements
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Solution
The correct option is D Statutory Liquidity Requirements The minimum balance to be maintained by the banks with the Central Bank are fixed by law and statutory powers have been conferred on the Central Bank to alter the quantum of these minimum reserves.The customary minimum cash reserve ratio is an important limitation on the lending capacity of banks.