Qualitative Credit Control Measures of RBI

Qualitative credit control measures refer to the measures adopted by the central bank to regulate the credit flow in an economy without affecting the supply of money. The following are some of the qualitative credit control measures of RBI:

1. Moral Suasion: This refers to the persuasion of the commercial banks by the RBI to follow a particular credit policy to meet the monetary objectives of the economy.

2. Capital Rationing: This refers to the RBI’s policy of controlling the flow of credit by regulating the capital base of the commercial banks.

3. Margin Requirements: This refers to the RBI’s policy of controlling the credit flow by regulating the amount of margin required to be maintained by the borrowers to obtain loans from the commercial banks.

4. Credit Authorization Scheme: This refers to the RBI’s policy of authorizing the commercial banks to lend only to certain sectors of the economy.

Not Qualitative Credit Control Measure of RBI

The Statutory Liquidity Ratio (SLR) is a quantitative credit control measure of the RBI rather than a qualitative measure. SLR refers to the percentage of deposits that the commercial banks are required to maintain in the form of certain specified liquid assets such as government securities, cash, and gold. The increase or decrease in the SLR ratio has a direct impact on the lending capacity of the commercial banks. Hence, SLR is a quantitative credit control measure that regulates the supply of money in the economy.