Question

How does RBI control credits? ​

Answer 1

Credit control is an important tool used by Reserve Bank of India, a major weapon of the monetary policyused to control the demand and supply of money (liquidity) in the economy. Central Bank administers control over the credit that the commercial banksgrant. Such a method is used by RBI to bring "Economic Development with Stability". It means that banks will not only control inflationary trends in the economy but also boost economic growth which would ultimately lead to increase in real national income stability. In view of its functions such as issuing notes and custodian of cash reserves, credit not being controlled by RBI would lead to Social and Economic instability in the country.

Answer 2

hello friend her is ur answer

1. *RBI issues currency notes on behalf of the central govt.
2. *RBI supervises the functioning of formal source of loans.
3. *RBI monitors the banks in actually maintaining cash balance.
4. *It also sees that banks give loans not just for profit making and traders but also to small borrowers, small cultivators etc..
5. *Periodically banks have to submit information to RBI on how much they are lending, to whom, at what interest rate, etc