Which of the following best describes the concept of 'Moral Suasion' as a monetary policy tool used by the Reserve Bank of India?

Moral suasion is a qualitative, indirect monetary policy tool where the RBI relies on persuasion, public communication, and appeals rather than formal regulatory directives to influence the lending and investment behaviour of banks. For example, RBI may call a meeting of bank CEOs and request that they lower lending rates or moderate credit growth in a specific sector, without formally mandating it. Moral suasion works because banks recognise that the regulator has other, more coercive tools at its disposal and maintaining a cooperative relationship is in their interest. It is distinct from quantitative tools like CRR, SLR, and repo rate, which have a direct and measurable impact on liquidity and credit.