Which of the following combinations of ‘RBI Tool – Monetary instrument’ is correct?
Show answer & explanation
Correct answer: A
Explanation
The correct answer is option 1 i.e. Qualitative – Moral Suasion.
Qualitative tools are used by the RBI to influence credit and economic activity without directly affecting the money supply. Moral suasion refers to persuasive measures, where the RBI urges banks to follow certain lending practices.
Other options:
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Quantitative – The Marginal requirement is incorrect. The marginal requirement is a qualitative tool, not quantitative.
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Qualitative – Cash Reserve Ratio (CRR) is incorrect. CRR is a quantitative tool.
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Qualitative – Open Market Operations is incorrect. OMO is a quantitative tool.