Which among the following is a qualitative tool of monetary policy?
[A] Bank Rate
[B] Credit Ceiling
[C] Credit rationing
[D] Cash Reserve Ratio
Show Answer
Correct Answer: C [Credit rationing ]
Notes:
The quantitative instruments are Open Market Operations, Liquidity Adjustment Facility (Repo and Reverse Repo), Marginal Standing Facility, SLR, CRR, Bank Rate, Credit Ceiling etc.
On the other hand, qualitative instruments are: credit rationing, moral suasion and direct action (by RBI on banks).
