ICSE Class 10 Answered
When credit is to be expanded what kind of bank rate policy should the central bank of country adopt?
Asked by bhupa.sri | 11 Dec, 2018, 07:57: PM
Expert Answer
The Reserve Bank of India has been using bank rate to control or expand credit according to the situation prevailing in an economy. If the credit needs to be expanded, a fall in bank rate will decrease the cost of borrowing from the central bank. This leads to decrease in lending rates by commercial banks. It encourages borrowers from taking loans which increases the ability of the commercial bank to create credit.
Answered by Tharageswari S | 12 Dec, 2018, 09:57: AM
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