Question : _____ refers to a method adopted by the Central Bank to persuade or convince commercial banks to advance credit in the economic interest of the country.
Option 1: Marginal Standing Facility
Option 2: Moral Suasion
Option 3: Credit Rationing
Option 4: Margin Requirements
Correct Answer: Moral Suasion
Solution : The correct option is Moral suasion .
Moral suasion is a method employed by central banks to influence or persuade commercial banks to act in a certain way, typically in line with the economic policies and objectives of the central bank. This persuasion is based on moral or ethical grounds rather than legal or regulatory mandates.
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