Question

Why rbi nedds to control the supply of credit in economy?

Answer 1

Answer:

RBI regulates the total volume of credit that may be extended to customers by the commercial banks and fixes a minimum time period for repayment or increases down payment required for specific categories to influence the flow of credit in a particular direction....

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Answer 2

Explanation:

It helps in achieving the primary objective of controlling inflation through price stability (stable price level of goods and services) and financial stability (equalizing demand for money with supply of money).