WBCS.LIVE practice question

Which of the following is a qualitative credit control tool used by the RBI?

Solve this multiple-choice question and check the correct answer with its explanation below.

Answer options

  1. Margin Requirements
  2. Cash Reserve Ratio (CRR)
  3. Open Market Operations (OMO)
  4. Statutory Liquidity Ratio (SLR)

Correct answer and explanation

Correct answer: Margin Requirements

Explanation: āœ… Correct Answer: A) Margin Requirements šŸ“š Explanation: The RBI uses qualitative (selective) credit control tools to specifically regulate the direction and flow of bank credit into certain sectors of the economy. Margin Requirements, moral suasion, and direct action are all qualitative tools. Conversely, CRR, SLR, and Open Market Operations are quantitative tools designed to broadly control the total volume of money supply.