Rationing of credit as a qualitative instrument of credit control is a method used by the central bank to limit the amount and purpose of credit granted by commercial banks and other financial institutions to certain sectors or industries, according to the economic priorities and objectives of the central bank. Rationing of credit can be […]
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Moral suasion as a qualitative instrument of credit control is a method used by the central bank to influence the lending behaviour of commercial banks and other financial institutions by using its moral authority and persuasive power, rather than legal or regulatory means. Moral suasion involves the central bank issuing advice, suggestions, requests and appeals
Margin requirements refer to the difference between the current value of the security offered for loan (called collateral) and the value of loan granted. For example, mortgaging land for Rs 100 lakh with the bank for a loan of Rs 75 lakh would have a margin requirement of Rs 25 lakh. Margin requirements are a
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