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Qualitative Instruments

The primary o...

Question

The primary objective of selective credit control is ________.

A

to raise the cost of credit for all purposes

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B

to decrease the total supply of credit in the economy

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C

to regulate total bank credit and general level of interest rates

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D

to influence allocation of credit among different borrowers and users

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Solution

The correct option is D to influence allocation of credit among different borrowers and users
The primary objective of selective Credit control is to influence allocation of credit among different borrowers and users.

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Similar questions

Q. Selective credit control affects the size of total credit in the economy.

Q. State whether the following statements are TRUE or FALSE.

1. Credit rationing is quantitative credit control measure of Central bank.
2. Regulation of Consumer Credit is a quantitative credit control measure of Central Bank.
3. Bank Rate is the selective credit control measure used by the Central Bank of the country.
4. Central Bank also performs commercial banking business.
5. The main objective of a Central Bank is to earn profit.

Q. Consider the following kinds of credit controls:
1) Minimum margins for lending against specific securities.
2) Ceiling on the amounts of credit for certain purposes.
3) Discriminatory rate of interest charged on certain types of advances.
Which of the credit controls given above are used by RBI as a selective credit control measures?

Q. Regulation of consumer credit is a quantitative credit control measure of the central bank.

Q. Credit rating is a quantitative credit control measure of the central bank.

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