The term 'Moral Suasion' as a monetary policy tool refers to:
A. Persuasion by the central bank to influence bank behaviour
B. Quantitative restriction on credit
C. Change in the bank rate only
D. Legal compulsion on banks
Answer: Option A
Solution (By JKSSB Mock Tests)
Moral suasion involves the central bank using persuasion, advice and appeals to influence the lending behaviour of commercial banks without legal compulsion.
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