Which of the following qualitative methods check the hoarding of essential commodities?

Credit authorisation scheme

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Margin requirement on secured loans

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Rationing of credit

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Moral suasion

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Solution

The correct option is B
Margin requirement on secured loans

A margin is the difference between the amount of loan and the market value of the security offered by the borrower. By changing the margin requirement, the central bank can affect the amount of loans. This method has been used to check the hoarding of essential commodities.

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