Three friends Sunil, Rakesh and Komal were discussing the role of Commercial Banks and Central Bank in controlling the credit
Three friends Sunil, Rakesh and Komal were discussing the role of Commercial Banks and Central Bank in controlling the credit.
- Sunil said that Commercial Bank is the controller of credit.
- Rakesh said that the Central Bank is the controller of credit
- Komal said that both the Commercial bank and the Central Bank are the controller of credit.
Who among them are correct?
(a) Sunil
(b) Rakesh
(c) Komal
(d) All of these
Anurag Pathak Changed status to publish January 5, 2024
Ans – (b)
Explanation:-
The Reserve Bank of India (RBI) is empowered to regulate the money supply in the economy through its ‘Monetary Policy’.
It is the policy adopted by the Central Bank of an economy in the direction of credit control or money supply.
As RBI has the sole monopoly in currency issue, it can control of credit control or money supply.
As RBI has the sole monopoly in currency issue, it can control credit and supply of money.
For this, RBI makes use of the following instruments of Monetary Policy.
1. Repo Rate
2. Bank Rate
3. Reverse Repo Rate
4. Open Market Operations
5. Legal Reserve Requirements
6. Margin Requirements
Anurag Pathak Changed status to publish January 5, 2024
