Which of the following is a qualitative measure of credit control used by the Reserve Bank of India?

A) CRR

B) Moral Suasion

C) SLR

Question

Question

This question was previously asked in

SSC CHSL Exam 2023 Tier-I Official Paper (Held On: 02 Aug, 2023 Shift 2)

Answer 1

The correct answer is Moral Suasion.

Key Points

Moral suasion is a qualitative measure of credit control used by the Reserve Bank of India.
It is a persuasive technique used by the central bank to influence the behavior of the commercial banks.
The RBI uses moral suasion to encourage banks to comply with the policy guidelines and regulations issued by the central bank.
It is a non-binding measure and relies on the reputation and credibility of the RBI to convince the banks to follow the desired course of action.
Other measures of credit control used by the RBI include quantitative measures such as CRR (Cash Reserve Ratio) and SLR (Statutory Liquidity Ratio).

Additional Information

CRR (Cash reserve ratio) is the percentage of deposits that banks are required to keep with the RBI as a reserve.
- It is a quantitative measure of credit control as it directly affects the liquidity and lending capacity of the banks.
SLR (Statutory Liquid Ratio) is the percentage of deposits that banks are required to invest in specified securities such as government bonds.
- It is also a quantitative measure of credit control as it restricts the funds available for lending by the banks.