Qualitatitive measures of credit control

Qualitatitive measures of credit control are also called selective measures of credit control. These measures refers to the measures which are directed towards the particular use of credit not its total volume. These measures consist of the following methods.

  1. Margin requirement: if the central bank increases its margin then it will reduce the money supply and on the other hand if the central bank decrease its margin then it will increase the money supply.
  2. Issue directions: the central bank also issue directions to the commercial banks in oral or written form which the commercial banks have to follow.
  3. Credit rationing: the central bank also rations the credit given by the commercial banks.
    Image courtesy  [Stuart Miles] at FreeDigitalPhotos.net

    Image courtesy [Stuart Miles] at FreeDigitalPhotos.net

  4. Moral suasion: is morally implied on the commercial banks to follow the rules and regulations by the central banks.
  5. Direct action: if the commercial banks don’t follow the rules and regulations of the central bank then central bank can take direct action against the commercial banks.

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