Credit control is most important function of Reserve Bank of India. Credit control in the economy is required for the smooth functioning of the economy. By using credit control methods RBI tries to maintain monetary stability. There are two types of methods: Quantitative control to regulates the volume of total credit.

Regulation of consumer credit is a qualitative method of credit control. This method involves implementing regulations and restrictions on the amount of credit that can be extended to consumers. It aims to control the availability and use of credit by consumers in order to manage overall credit levels in the economy.

Explanation:

1. Qualitative Method of Credit Control:
- Qualitative methods of credit control refer to the use of regulations and restrictions to control the availability and use of credit.
- These methods focus on influencing the quality and direction of credit rather than the quantity.

2. Regulation of Consumer Credit:
- Regulation of consumer credit is one such qualitative method of credit control.
- It involves implementing regulations and restrictions on the amount of credit that can be extended to consumers.
- This can be done through various measures, such as setting limits on interest rates, imposing restrictions on loan terms, and requiring lenders to follow certain lending practices.

3. Objectives of Regulation of Consumer Credit:
- The main objective of regulating consumer credit is to prevent excessive borrowing and over-indebtedness among consumers.
- By implementing regulations and restrictions, authorities aim to ensure that consumers do not take on more debt than they can afford to repay.
- This helps to maintain financial stability and prevent situations where a large number of borrowers default on their loans, which can have negative repercussions for the overall economy.

4. Impact on Credit Availability:
- Regulation of consumer credit can have a direct impact on the availability of credit to consumers.
- By imposing restrictions on interest rates or loan terms, authorities can limit the amount of credit that lenders are willing to extend to consumers.
- This can help to prevent excessive borrowing and encourage responsible lending practices.

5. Importance in Credit Control:
- Regulation of consumer credit plays a crucial role in credit control as it helps to manage overall credit levels in the economy.
- By controlling the availability and use of credit by consumers, authorities can influence the overall credit conditions and prevent situations of excessive borrowing or credit booms.
- This helps to maintain financial stability and prevent the buildup of systemic risks in the economy.

In conclusion, regulation of consumer credit is a qualitative method of credit control that involves implementing regulations and restrictions on the amount of credit that can be extended to consumers. It aims to prevent excessive borrowing and over-indebtedness among consumers, thereby contributing to financial stability.

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