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In a particlualr year ,RBI instructed the commerical banks not to advance loans to people whose annual income is above 6 lakh .Is it justified ? Why? |
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Answer» Solution :Justification of instructions given by RBI will depend on the PHASES of trade CYCLES: If there is infaltion in this particular year in the ECONOMY there is need to REDUCE money supply hence RBI 's instructions to ration CREDIT (lons ) is justified If there is recession in the economy there is need to increase money supply hence RBI's instruction to ration credit (loans) is not justified. |
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