Question

Difference between qualitative and quantitative credit control policy of central bank

Answer 1

Credit control is done by RBI to maintain monetary stability in the economy. It is one of the main functions of RBI.

The main difference between Qualitative and Quantitative method is that:

Quantitative method is used to control the volume of total credit through bank rate policy, open market operations, CRR, SLR, Repo rate etc.

Qualitative method is used to control the flow of credit through direct auction, moral suasion, consumer credit regulations, margin requirements etc.