Explain margin requirement, rationing of credit , moral suasion
Answers
Answer:
MARGIN REQUIREMENT:margin is the difference between the value of security and amount of loan.
example if u go to bank for loan of rs 50,000 then bank take colleteral such as property paper or gold which may be higher in amount than loan for example u submit gold of rs 100,000
then margin diffrence is 50,000.
RATIONING OF CREDIT:credit rationing means imposing limits and charging higher/lower rates of interest in selective sectors.such measures restricts the flow of credit to a particular sector.
example: educational loan is 8-10% rate of interest,car loans is 12-15% rate of interest, personal loan is 20-22% rate of interest etc there are different sector and different rate of interest on them this is rationing of credit.
MORAL SUASION:moral SUASION is nothing as parents guide their children not to do wrong things,similarly RBI tell all banks.
DEFINITION:IT means persuasion and requests by the central bank to the common banks to follow the monetary policy of the central bank.
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Answer:
Hey Mate !!
Margin requirement:
A Margin Requirement is the percentage of marginable securities that an investor must pay for with his/her own cash. ... An Initial Margin Requirement refers to the percentage of equity required when an investor opens a position.
Rationing of credit:
Credit rationing is the limiting by lenders of the supply of additional credit to borrowers who demand funds, even if the latter are willing to pay higher interest rates. It is an example of market imperfection, or market failure, as the price mechanism fails to bring about equilibrium in the market.
Moral suasion:
Moral suasion is an appeal to morality in order to influence or change behavior. A famous example is the attempt by William Lloyd Garrison and his American Anti-Slavery Society to end slavery in the United States by using moral suasion.
Explanation:
Hope it helps u
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