Margin requirement refers to the percentage of the loan amount that the borrower must finance from their own resources. By varying this margin, the central bank can control the amount of credit available for specific purposes, such as loans against securities or commodities. Since it targets specific sectors or purposes rather than the overall volume of credit, it is considered a qualitative method of credit control.
Variation in margin requirements —
Asked in westbengal/WBCS Main 2019 Paper 5 2019 · Topic: Money & Banking (Monetary Policy: Objectives, Instruments (quantitative and qualitative), and Transmission Mechanism)
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