Qualitative or Selective Methods of Credit Control | Economics | Bcom | BBA | CA | #himanshunandwani

Selective / Qualitative methods of Credit Controls :
The main selective methods of credit control are as follows:

Changes in margin requirements
Regulation of consumer's credit
Control through directives
Rationing of credit
Direct action
Moral persuasion
Publicity

Objectives of Selective Methods of Credit Control :

To distinguish between essential and non-essential uses of credit and to discriminate against the non-essential lines of production.

To tackle the sensitive spots of the economy without affecting the economy as a whole.

To discourage excessive consumer demand for certain types of goods like the consumer durables which are financed by bank credit on instalment basis.

To correct an unfavourable balance of payment. This is sought to be done by charging a higher rate by discount on import bills and a lower rate on export bills.

To bring the non-banking financial intermediaries under the control of the banking system.

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