Join 60,000+ competitive exam aspirants
or with email
Your Cart
SubtotalтВ╣0
TotalтВ╣0
Examoogle тАв User тАв info@examoogle.com тАв EE-2024-8821
Chapter 1 of 12 тАв Page 1 of 248ЁЯФТ Protected PDF тАв Watermarked
Join 60,000+ competitive exam aspirants
Which of the following statements accurately describes the role of moral suasion in controlling money?
It is a combination of persuasion and pressure used by the RBI to influence banks' lending behaviour.
It is a direct tool used by the RBI to control the money supply by setting interest rates.
It refers to the variation in the statutory liquidity ratio to regulate the allocation of bank credit.
It involves the sale and purchase of government securities to influence the money supply.
It is a combination of persuasion and pressure used by the RBI to influence banks' lending behaviour.
Moral suasion is a qualitative or selective monetary policy tool used by the Reserve Bank of India (RBI) involving a combination of persuasion, pressure, and advice to influence the lending behaviour of commercial banks. It is non-statutory and relies on moral force, discussions, and guidelines rather than legislative compulsion or statutory penalties.
Moral suasion is a qualitative or selective monetary policy tool used by the Reserve Bank of India (RBI) involving a combination of persuasion, pressure, and advice to influence the lending behaviour of commercial banks. It is non-statutory and relies on moral force, discussions, and guidelines rather than legislative compulsion or statutory penalties.
Under Section 21 and Section 35A of the Reserve Bank of India Act, 1934, the RBI has statutory powers to give directions and exercise control over commercial banks in India, which serves as the legal foundation for implementing qualitative instruments like moral suasion and direct action.
Moral suasion is a qualitative tool of monetary policy used by the central bank.
It combines formal and informal discussions, advice, and pressure to make commercial banks align with national monetary objectives.
Unlike Cash Reserve Ratio (CRR) or Statutory Liquidity Ratio (SLR), it is non-statutory and depends on the moral influence of the RBI.
Option B describes quantitative tools or direct policy rate adjustments such as the Repo Rate.
Option C refers to variations in the Statutory Liquidity Ratio (SLR), which is a quantitative statutory requirement.
Option D describes Open Market Operations (OMOs), which involve buying and selling government securities to control liquidity.
A is correct тАФ It is a combination of persuasion and pressure used by the RBI to influence banks' lending behaviour.
Get instant step-by-step AI explanations, full shift Previous Year Papers (SSC GD, RRB, SSC JE), and regional rank analysis on the official Examoogle App.
Free Download тАв 100K+ Aspirants