Methods / Techniques / Weapons of Credit Control of Central Bank.

Credit control means checking that customers pay on time and do not exceed their credit limits. Moreover it should mainly aim at internal price  stability. The most important function of central bank is to control credit created by commercial banks. It controls credit depending on different techniques. Techniques of credit control of central bank can be discussed dividing by following two separate methods :

A. Quantitative method.

B. Selective method.

A. Quantitative method :

If credit is controlled by numerical changing is called Quantitative method. In this system total loan given by commercial banks, costs of loan or reserve are controlled. Quantitative method of credit control are practiced the  following three policies :

1.Bank rate policy.

2.Open market policy.

3.Variable reserve ratio policy.

1. Bank rate policy :

Bank rate is the rate at which the central bank is readied to loan to different banks in the keeping money framework and to rebate charges, security, security and so forth of business bank. The central bank controls credit by making mixed bags in the bank rate. If the economy's need is to broaden credit, the central bank cuts down the bank rate. Gaining from the central bank gets the chance to be humble and straightforward. So the commercial banks will get more. They will, in this manner, impel credits to customers at a lower rate. The business area rate of venture will be decreased. This backings business development, and expansion of credit takes after which engages the climb in expenses. The opposite happens when credit is to be contracted in the economy. The central bank raises the bank rate which makes acquiring outlandish from it. So the banks get less. They, consequently, raise their crediting rates to customers. The business rate of premium also ascends by virtue of the tight cash market. This discourages fresh attributes and puts weight on borrowers to pay their past commitments. This incapacitates business activity. There is choking of credit which disheartens the rising in expense. Likewise cutting down the bank rate offsets inclinations and raising the bank rate controls expansion.

2. Open market policy :

Open market operations infers the buy and offer of government security. Its are another framework for quantitative credit control used by a national bank. This framework insinuates the arrangement and purchase of securities, bills and commitments of government and furthermore private financial foundations by the central bank. Yet in its tight sense, it basically means overseeing just in government securities and bonds. There are two principle aims of open business operations. One is to affect the stores of business keeps money with a particular finished objective to control their vitality of credit creation. Two is to impact the business rates of premium so as to control the business credit. Its technique for operation is according to the accompanying. Accept the central bank of a country needs to control expansion of credit by the business manages an account with the finished objective of controlling inflationary weights inside the economy. It offers government securities in the money business part signifying, say, 100 millions . The late give the central bank checks for this aggregate drawn against the central banks in which the all inclusive community have their records. The central bank reduces this total in their records with it. This applies generally as though the commercial banks have moreover obtained securities from the central bank. 

3. Variable reserve ratio policy :

The method of bringing about changes in the minimum cash preservation of commercial banks known as the technique for variable money save proportion. It is called direct system. Every scheduled  commercial bank  is to mandatory accumulate a decided piece of stores to central bank. On the off chance that credits are brought up in business sector, then national bank builds that rate so advances giving force of banks and the quantity of advances into the business sector ought to be diminished and the other way around. Along these lines of expanding & diminishing the rate of gathered, central bank controls advance.

B. Selective Methods :

Credits controlling system by central bank through receiving special system to any selective areas is called  selective methods are shown below :

1. Credit rationing method :

In this system central bank forces a couple rules & prohibited divisions on advance giving or size of advance to commercial banks. As per that coordinated guidelines, parts and size the commercial banks gives its credits and advances.

2. Direct actions :

To control credits through direct evidence by central bank is called direct technique. In this framework the commercial banks are to be said to necessarily take after the advance giving tenets demonstrated by central bank. On the off chance that any bank don't take after that then central bank rebuff it in different courses, for example, cheating bank rate, over safeguarding of store, wiping out the offices of clearing house, precluding on specific administration and so on.

3. Changing the marginal rate of security :

Central bank controls loan by changing the marginal rates of security. Its a another credit control system of central bank.

4. Consumers credit control :

central bank controls credit by Increasing & decreasing the installed  size and amount due to changing  the customers eagerness on loan.

5. Moral persuasion :

It is ethically obligatory for commercial banks to comply with every one of the counselings of central bank. In this way, the central bank tosses a couple of counselings to commercial banks so that they might ethically obey it. This is another credit controlling system of central bank.

6. Publicity :

In this system central bank publishes regular news, bulletins, journals, reports etc and takes help of electronic media for highly informing to the  about the necessity & ways of loan controlling.

In this framework central bank distributes normal news, announcements, diaries, reports and so forth and takes help of electronic media for exceedingly advising to commercial & schedule banks about the need & methods for advance controlling.

At last it is said that, the above methods, systems, policies & techniques are followed by central bank to control credits, loans & advances for economic stability in a country.