QUALITATIVE METHOD OF CREDIT CONTROL BY THE CENTRAL BANK?



Meaning: -Selective credit controls have been taken to control money supply or credit, i.e. either to increase or decrease the money supply to specific purposes. Such controls the flow of money into unproductive channels or purposes. The selective controls are

QUALITATIVECREDIT (SELECTIVE) CONTROL

1.      Ceiling on the Level of Credit: -The ceiling (upper limit) on the level of credit restricts the lending capacity of a bank to grant various advances against certain controlled commodities or securities.

2.      Margin Requirements: -The RBI imposes minimum margin requirements, which vary from 20% to 80% for lending against securities or commodities. Margin against a particular security is decreased or increased in order to encourage or discourage the flow of credit to a particular sector.

3.      Directives: - The RBI issue directives (orders) to banks regarding advances. Directives are issued in the following aspects.
·         Minimum margin requirements against securities.
·         Maximum limit on advances to borrowers.
·         The Percentage of CRR and Statutory Liquidity Ratio (SLR)
·         Minimum lock-in period, etc.

The RBI takes necessary action on those banks, which fail to comply with its directives.


4.      Moral Suasion: -Under moral suasion, the RBI issues periodical letters to bank to exercise control over credit. Such periodical letters act as a remainder to the banking sector to follow credit control norms (rule).


5.      Direct Action: - The Centralbank may take direct action on commercial banks for not observing the guidelines. The banks have to follow central bank directives or guidelines in case of granting credit such as margin requirements.



6.      Publicity: -Central bank publishes information regarding money market and credit situation in the market. This information can be useful to the banks in framing credit policy and fixing interest rates.




7.      Regulation of consumer Credit: -The central bank frames guidelines relating to consumer credit. The bank providing consumer credit to buy consumer durables and other items have to follow such guidelines. 

No comments:

Post a Comment

PDF FILE TO YOUR EMAIL IMMEDIATELY PURCHASE NOTES & PAPER SOLUTION. @ Rs. 50/- each (GST extra)

HINDI ENTIRE PAPER SOLUTION

MARATHI PAPER SOLUTION

SSC MATHS I PAPER SOLUTION

SSC MATHS II PAPER SOLUTION

SSC SCIENCE I PAPER SOLUTION

SSC SCIENCE II PAPER SOLUTION

SSC ENGLISH PAPER SOLUTION

SSC & HSC ENGLISH WRITING SKILL

HSC ACCOUNTS NOTES

HSC OCM NOTES

HSC ECONOMICS NOTES

HSC SECRETARIAL PRACTICE NOTES

2019 Board Paper Solution

HSC ENGLISH SET A 2019 21st February, 2019

HSC ENGLISH SET B 2019 21st February, 2019

HSC ENGLISH SET C 2019 21st February, 2019

HSC ENGLISH SET D 2019 21st February, 2019

SECRETARIAL PRACTICE (S.P) 2019 25th February, 2019

HSC XII PHYSICS 2019 25th February, 2019

CHEMISTRY XII HSC SOLUTION 27th, February, 2019

OCM PAPER SOLUTION 2019 27th, February, 2019

HSC MATHS PAPER SOLUTION COMMERCE, 2nd March, 2019

HSC MATHS PAPER SOLUTION SCIENCE 2nd, March, 2019

SSC ENGLISH STD 10 5TH MARCH, 2019.

HSC XII ACCOUNTS 2019 6th March, 2019

HSC XII BIOLOGY 2019 6TH March, 2019

HSC XII ECONOMICS 9Th March 2019

SSC Maths I March 2019 Solution 10th Standard11th, March, 2019

SSC MATHS II MARCH 2019 SOLUTION 10TH STD.13th March, 2019

SSC SCIENCE I MARCH 2019 SOLUTION 10TH STD. 15th March, 2019.

SSC SCIENCE II MARCH 2019 SOLUTION 10TH STD. 18th March, 2019.

SSC SOCIAL SCIENCE I MARCH 2019 SOLUTION20th March, 2019

SSC SOCIAL SCIENCE II MARCH 2019 SOLUTION, 22nd March, 2019

XII CBSE - BOARD - MARCH - 2019 ENGLISH - QP + SOLUTIONS, 2nd March, 2019


BUY FROM PLAY STORE

DOWNLOAD OUR APP


HOW TO PURCHASE OUR NOTES?



S.P. Important Questions For Board Exam 2020


O.C.M. Important Questions for Board Exam. 2020


Economics Important Questions for Board Exam 2020


Chemistry Important Question Bank for board exam 2020


Physics – Section I- Important Question Bank for Maharashtra Board HSC Examination


Physics – Section II – Science- Important Question Bank for Maharashtra Board HSC 2020 Examination


MUST REMEMBER THINGS on the day of Exam


Are you prepared? for English Grammar in Board Exam.


Paper Presentation In Board Exam


How to Score Good Marks in SSC Board Exams


Tips To Score More Than 90% Marks In 12th Board Exam


How to write English exams?


How to prepare for board exam when less time is left


How to memorise what you learn for board exam


No. 1 Simple Hack, you can try out, in preparing for Board Exam

How to Study for CBSE Class 10 Board Exams Subject Wise Tips?

JEE Main 2020 Registration Process – Exam Pattern & Important Dates

NEET UG 2020 Registration Process Exam Pattern & Important Dates

How can One Prepare for two Competitive Exams at the same time?

8 Proven Tips to Handle Anxiety before Exams!