What are the different methods of credit control?

The following are the important methods of credit control under selective method:

• Rationing of Credit.
• Direct Action.
• Moral Persuasion. ADVERTISEMENTS:
• Method of Publicity.
• Regulation of Consumer’s Credit.
• Regulating the Marginal Requirements on Security Loans.

  What are the instruments of credit control class 12?

  Question 3 (A):

  • Central Bank and Commercial Bank.
  • Quantitative Credit Control Measures and Qualitative Credit Control Measures.
  • Bank Rate and Open Market Operations.
  • Cash Reserve Ratio and Statutory Liquidity Ratio.

    What are the credit control of RBI?

    Credit control is an important tool used by Reserve Bank of India, a major weapon of the monetary policy used to control the demand and supply of money (liquidity) in the economy. Such a method is used by RBI to bring “Economic Development with Stability”.

    What does it mean to tighten credit?

    A credit crunch (also known as a credit squeeze, credit tightening or credit crisis) is a sudden reduction in the general availability of loans (or credit) or a sudden tightening of the conditions required to obtain a loan from banks.

    What are the different types of credit controls?

    The methods of credit control are also called the central banking techniques. There are broadly speaking two types of controls used by the Central Banks in modern times for regulating bank advances: (a) Quantitative or General Credit Controls, and (b) Qualitative Controls or the Selective Credit Controls.

    Why are selective instruments of credit control important?

    Hence they are called selective instruments. The prominent amongst them are as follows: Whenever a commercial bank gives a loan against a tangible security, it maintains a margin between the value of the security and the amount of the loan given. This is necessary for maintaining safety of the bank.

    What are the different types of credit instruments?

    Perhaps, man has become more selfish too, on account of the increase in the struggle for existence; hence almost always some record of transactions is kept in black and white. This record may take the form of a promissory note, a bill of exchange, a cheque, a draft or a hundi.

    What are the objectives of control of credit?

    The aim of the quantitative controls is to regulate the amount of bank advances, i.e., to make the banks lend more or lend less. The object of the selective credit controls, on the other hand, is to divert bank advances into certain channels or to discourage them from lending for certain purposes.