Bank Rates and Monetary Policy

Bank Rate is an RBI tool for short-term measures. State how its review affects commercial banking.

(a) An increase in Bank Rate leads to increase in deposit rates as well as Prime Lending Rate (PLR) on the part of commercial banking.
(b) It reduces the EMI.

Which of the above statements is/are incorrect?

Which of the following is treated as artificial currency?

Raising the interest rates causes contraction in money supply. Examine the under noted statements:

(a) It encourages savings.
(b) It discourages borrowing.
(c) No effect

Which of the above is/are incorrect?

When do commercial banks prefer to park their excess funds with RBI?

(a) During the increase in repo rate
(b) During the increase in reverse repo rate
(c) During the increase in SLR (Statutory Liquidity Ratio)

To implement a monetary policy, RBI adopts the following quantitative measures:

(a) Bank rate
(b) CRR and SLR
(c) OMO (Open Market Operations)
(d) Stipulating margin

Which of the above is/are incorrect?

Which of the following is considered as Term Deposit?

As per existing policies, the cash reserve ratio of scheduled banks is fixed at a certain percentage of their NDTL. What does NDTL stand for?

Term loans means Loans:

The base rate is required to be reviewed by banks at least

Enlist the main objectives of monetary policy of RBI:

(a) Price stability
(b) Equitable distribution of credit
(c) Avoiding over-stocking
(d) Boosting Exports
(e) Rigidity in operation so as to ensure autonomy, easing of competition

Choose the incorrect one:

CRR and SLR tend to ensure the liquidity and solvency of the bank. Consider the following statements in the light of this:

(a) CRR tends to impound a certain portion of available lendable funds with commercial bank in case from RBI.
(b) SLR is an obligation on the part of commercial bank to maintain quite a good chunk of their resources in liquid shape, viz. gold cash and approve securities, thereby curtailing their lending or in other words, exposure in loan portfolio.
(c) Imposing CRR + SLR only ensures a stable govt. approved securities market in the country.

Which of the above is/are correct?

Enumerate the selective credit controls employed by RBI.

(a) Stipulating minimum margins for lending against specific securities.
(b) Ceiling on credits for certain purposes.
(c) Discriminatory rate of interest charged on certain type of advances.

Which of the above is incorrect?

Consider the following statements about SLR:

(a) SLR is the amount of deposits banks invest in govt. securities.
(b) SLR ensures that banks do not provide all the deposits as loans.
(c) SLR is the percentage deposits kept with RBI.

Which of the above is correct?

Which of the following is not a qualitative measures adopted by RBI for effecting credit control?

(a) Stipulation of margins – borrowers stake
(b) Consumer credit regulation
(c) Rationing of credit
(d) RBI ignores the non-fulfilment of conditions and requirements on the part of commercial banks