BANKING AFFAIRS

Detailed explanation-1: -Different methods are used by the Central Bank to control credit, which is broadly classified into two main categories: Quantitative Methods or General credit control. Qualitative Methods or Selective credit control.

Detailed explanation-2: -Quantitative or traditional methods of credit control include banks rate policy, open market operations and variable reserve ratio. Qualitative or selective methods of credit control include regulation of margin requirement, credit rationing, regulation of consumer credit and direct action.

Detailed explanation-3: -Quantitative credit control refers to overall credit in the economy, affecting all sectors of the economy equally and without discrimination. Qualitative credit control refers to selective credit control that focuses on allocation of credit to different sectors of the economy.

Detailed explanation-4: -The different instruments of credit control used by the Reserve Bank of India are Statutory Liquidity Ratio (SLR), Cash Reserve Ratio (CRR), the Bank Rate Policy, Selective Credit Control (SCC), Open Market Operations (OMOs).

Detailed explanation-5: -The important qualitative or selective methods of credit control are; (a) Marginal Requirements, (b) Regulation of Consumer Credit, (c) Credit Rationing, (d) Moral Suasion and (e) Direct Action.