Which one of the following is not a qualitative credit control measur...
Securing Loan Regulation by Fixation of Margin Requirements: The practice of margin requirement is adopted by all the bankers to determine the loan value of a collateral security offered by the borrower. ADVERTISEMENTS: The loan value of the security = The market value of the security – The Margin.
Hence, the correct option is (a).
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Which one of the following is not a qualitative credit control measur...
Fixing margin requirements:
Margin requirements refer to the minimum amount of funds that a borrower must contribute towards an investment. This is not a qualitative credit control measure of the RBI.
Qualitative credit control measures by the RBI:
1. Variable interest rates: RBI can adjust the interest rates to control the flow of credit in the economy. By increasing or reducing interest rates, RBI can influence borrowing and spending behavior.
2. Open market operations: This involves buying and selling of government securities in the open market. When RBI sells securities, it reduces the money supply in the economy, and when it buys securities, it increases the money supply.
3. Credit rationing: RBI can impose credit limits on banks and financial institutions to control the amount of credit they can extend to borrowers. This helps in managing the overall credit flow in the economy.
In conclusion, fixing margin requirements is not a qualitative credit control measure of the RBI. The RBI primarily uses measures like variable interest rates, open market operations, and credit rationing to regulate credit flow in the economy.