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Question
Which of the following is not a quantitative credit control measure of a Central Bank?
Which of the following is not a quantitative credit control measure of a Central Bank?
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Solution
The correct option is D Moral Suasion
The central
bank makes the member bank agree through persuasion or pressure to follow its
directives which is generally not ignored by the member banks. The banks are
advised to restrict the flow of credit during inflation and be liberal in
lending during deflation. This qualitative credit control measure is known as moral suasion.
The central bank makes the member bank agree through persuasion or pressure to follow its directives which is generally not ignored by the member banks. The banks are advised to restrict the flow of credit during inflation and be liberal in lending during deflation. This qualitative credit control measure is known as moral suasion.
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