Identify the quantitative tools used by RBI to control money supply.

(A) Moral Suasion
(B) Bank Rate
(C) Cash Reserve Ratio
(D) Open Market Operations
(E) Margin requirement

Choose the correct answer from the options given below :

(B), (C) and (D) only

Out of the provided options, the correct answer for quantitative tools used by RBI to control money supply is:(B), (C) and (D) only

Here's why: Quantitative tools: These tools directly influence the quantity of money in circulation, affecting the money supply and impacting borrowing costs, investment spending, and overall economic activity.

• (A) Moral Suasion: This is a qualitative tool where the RBI communicates with banks and financial institutions, encouraging them to adopt certain lending practices or avoid excessive risk-taking. While it can indirectly influence the money supply, it doesn't directly control its quantity.
• (B) Bank Rate: This is the rate at which the RBI lends to commercial banks. By changing the Bank Rate, the RBI influences the cost of borrowing for banks, which in turn affects their lending rates to businesses and individuals. This can impact credit availability and influence the money supply.
• (C) Cash Reserve Ratio (CRR): This is the percentage of deposits that commercial banks are required to hold as reserves with the RBI. By increasing the CRR, the RBI reduces the amount of money available for banks to lend, thus reducing the money supply.
• (D) Open Market Operations (OMO): Through OMOs, the RBI buys and sells government securities in the open market. When it buys securities, it injects money into the system, increasing the money supply. When it sells securities, it absorbs money from the system, reducing the money supply.
• (E) Margin requirement: This is the percentage of the value of an asset that must be paid upfront by a buyer. While it can affect borrowing for specific sectors like investments, it doesn't directly control the overall money supply.

Therefore, only Bank Rate, Cash Reserve Ratio, and Open Market Operations are true quantitative tools used by the RBI to directly control the money supply. Other options like Moral Suasion and Margin requirement fall under the category of qualitative tools that exert indirect influence.