Qualitative tools of Monetary policy & Priority sector lending by Thirupathi Rao Ghanta UPSC Economy
Channel: Sarat Chandra IAS Academy
Date: 06/07/2021

Qualitative tools of Monetary policy, Priority sector lending by Thirupathi Rao for UPSC CSE Economy

In this classroom lecture at Sarat Chandra IAS Academy, Thirupathi Rao sir discusses the below

Qualitative credit is used by the RBI for selective purposes. Some of them are

Margin requirements: This refers to difference between the securities offered and and amount borrowed by the banks.
Consumer Credit Regulation: This refers to issuing rules regarding down payments and maximum maturities of installment credit for purchase of goods.
Guidelines: RBI issues oral, written statements, appeals, guidelines, warnings etc. to the banks.
Rationing of credit: The RBI controls the Credit granted / allocated by commercial banks.
Moral Suasion: psychological means and informal means of selective credit control.
Direct Action: This step is taken by the RBI against banks that don’t fulfill conditions and requirements. RBI may refuse to rediscount their papers or may give excess credits or charge a penal rate of interest over and above the Bank rate, for credit demanded beyond a limit.


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