Which of the following qualitative or selective instruments of monetary policy is utilized by the Reserve Bank of India to restrict credit expansion for specific purposes?

💡 Solution & Explanation

Margin requirements serve as a qualitative credit control instrument where the central bank dictates the proportion of loan value a borrower must finance through personal funds, curbing speculative hoarding. Statutory liquidity ratio and repo rate represent quantitative instruments affecting overall money supply rather than specific sectors. Open market operations manage systemic liquidity through government paper transactions. Central banks employ selective tools to direct credit toward productive priority sectors while dampening asset bubbles.