Sunday, February 5, 2017

Bank rate is a quantitative measure of credit control.

Ans. Yes, I do agree with the given statement.


The general credit control is quantitative credit controls, which maintain proper quantity of credit or money supply in the market. These methods are formulated to affect proper liquidity in the market. Some of the important general credit controls are:

Bank Rate: -It is the rate at which central bank (RBI) lends money to commercial banks by discounting bills of exchange. It acts as a guide line to the banks for fixing interest rates. If bank rate increases, interest rate wills goes up, and vice-versa. The bank rate is decided by the Central Bank. In April 2010, the bank rate was maintained at 6% p.a. Bank rate acts as a guideline to the banks for fixing interest rates. If the bank rates increases the interest rates increase, and vice-versa.