Instrument used by RBI under General Credit Control
Q. Which is the instrument used by RBI under general credit control?- Published on 08 Feb 17a. CRR
b. SLR
c. Bank Rate
d. Exchange Control
ANSWER: Bank Rate
Bank Rate
The bank rate, also known as the discount rate, is the rate of interest charged by the RBI for providing funds or loans to the banking system.
Increase in Bank Rate increases the cost of borrowing by commercial banks which results in the reduction in credit volume to the banks and hence declines the supply of money.
Increase in the bank rate is the symbol of tightening of RBI monetary policy.
As of October 04, 2016, bank rate is 6.75 percent.
