Question

Explain asset restriction of regulation. (What central bank can do with it )

Answer 1

A restricted asset may be cash or a fixed asset. Restricted asset is the asset which is restricted to be sold before a locking period by the owner of the asset. An asset can be restricted for a person or an organization due to collateral given to lender to support a loan. If asset is given to collateral for a loan, then it cannot be cannot be sold without consent of lender.

For a non-profit organization, restricted assets are donations to be used for a particular purpose/project specified by donor.

An asset may be restricted if it is deposited for giving security to Government or any organization for any purpose.

Central bank has authority to limit for withdrawing funds from bank or deposit in the bank. If central bank makes limitation due to any negativity or failing to payment of loan, one cannot withdraw funds but deposit. Central bank regulates other banks to follow directions for restriction of asset.