The following points highlight the top four techniques of credit control adopted by central bank. The techniques are: 1. The Bank Rate 2. Open Market Operations 3. Variable Reserve Ratio 4. Selective or Qualitative Methods of Control. Credit Control Technique # 1. The Bank Rate: A commercial bank's customer gets money by discounting eligible bills of exchange or other commercial [...]
The following points highlight the five main causes of the ineffectiveness of credit control policy of the Reserve Bank. The causes are: 1. Lack of Control on Indigenous Bankers 2. Lack of Organised Money-market 3. No well Organised Bill Market in India 4. More Cash Reserve with the Member Banks 5. Lack of Elasticity in Indian Economy. Cause # 1. [...]
The following points highlight the three important methods to control the credits. Method # 1. Quantitative Methods of Credit Control: The following are the quantitative methods of credit control: a. Variation in the Bank Rate: The bank rate is the minimum official rate at which the central bank rediscounts first class bills brought by the commercial banks to it. It [...]