Economics • Banking & FinanceMedium
Which tool does the Reserve Bank of India use for qualitative or selective credit control?
A. Bank Rate
B. Margin Requirements✓ Correct Answer
C. Open Market Operations
D. Cash Reserve Ratio
💡 Solution & Explanation
Margin requirements function as a selective or qualitative credit control instrument deployed by the Reserve Bank of India to regulate speculative borrowing by altering the loan-to-value ratio for specific assets. Instruments like the bank rate and cash reserve ratio operate as quantitative controls affecting the overall money supply broadly.
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