When the RBI uses persuasion to convince banks to hold government securities instead of lending to certain sectors, it is called:

CA Foundation · Business Economics · PYQS · January 2026
When the RBI uses persuasion to convince banks to hold government securities instead of lending to certain sectors, it is called:
(A) A. Margin requirements
(B) B. Statutory Liquidity Ratio
(C) C. Market Stabilization Ratio
(D) D. Moral Suasion

Suggested Answer and Working Notes:

Correct Answer: Option (D)

D. Moral Suasion

Topics: Money Market

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