CREDIT CONTROL POLICY OF RBI

Credit control is the regulation of credit by the

central bank for achieving some definite objectives.
modern economy is a credit economy.
Because credit has come to play a major role in
setting all kinds of monetary and business transactions.
charges in the volume of credit influence the level of
business activity and the price level in the economy.
 Hence ,it becomes necessary for the central bank to
keep the creation of credit under control in order to
maintain stability in the economic system
 Objectives of credit control
• Economic growth

• Price stability

• Exchange rate stability

• Full employment
• Methods of credit control

Quantitative Qualitative
measures measures

OMO BANK CRR REPO MORAL

RATE RATE SUASION

DIRECT CREDIT
ACTION RATIONING
 Quantitative Methods
• 1.OMO:Open market operations refers to direct
buying and selling of govt securities in the
money market by the central bank.
• 2.BANK RATE: The bank rate or discount rate is
the at which the central bank is prepared to buy
or discount the first class bills of exchange.
• 3.CRR: Every commercial bank is required by law
to maintain certain percentage of its deposit
with the central bank which is called cash
reserve ratio.
• 4.REPO RATE: It is the rate at which bank
borrows from the RBI (short term loan)

• 5.REVERSE REPORATE: It Is The Rate At Which

Rbi Takes Loans From The Commercial Banks.

• 6.STATUTARY LIQUIDITY RATIO: It says that

every commercial bank have to keep with
themselves certain percentage of their
deposits in terms of gold or cash.
 Qualitative methods
• Rationing of credit

• Direct action

• Regulation of consumer credit

• Moral suasion