CMA Foundation · Fundamentals of Business Economics and Management · Money and Banking
Which of the following RBI instruments is a qualitative, selective tool of credit control rather than a quantitative, general tool?
Regulating margin requirements on loans against specific securities is the selective, qualitative tool. It directs credit toward or away from particular uses. Bank rate, cash reserve ratio and open market operations are quantitative tools that influence the overall volume of credit in the economy.
- ABank rate policy
- BCash reserve ratio
- CRegulation of margin requirements on loans against specific securitiesCorrect
- DOpen market operations
Explanation
Quantitative tools such as bank rate, CRR and open market operations affect the total volume of credit across the economy. Margin requirements on loans against particular securities or commodities target specific sectors, so they are a selective, qualitative tool. The other three options are general quantitative tools.
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