Write about the credit policy in India?
Answers
Bank of India, a major weapon of the monetary policy used to control the demand and supply of money (liquidity) in the economy. Central Bank administers control over the credit that the commercial banks grant. 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
➡️ Cʀᴇᴅɪᴛ ᴄᴏɴᴛʀᴏʟ ɪs ᴀɴ ɪᴍᴘᴏʀᴛᴀɴᴛ ᴛᴏᴏʟ ᴜsᴇᴅ ʙʏ Rᴇsᴇʀᴠᴇ Bᴀɴᴋ ᴏғ Iɴᴅɪᴀ, ᴀ ᴍᴀᴊᴏʀ ᴡᴇᴀᴘᴏɴ ᴏғ ᴛʜᴇ ᴍᴏɴᴇᴛᴀʀʏ ᴘᴏʟɪᴄʏ ᴜsᴇᴅ ᴛᴏ ᴄᴏɴᴛʀᴏʟ ᴛʜᴇ ᴅᴇᴍᴀɴᴅ ᴀɴᴅ sᴜᴘᴘʟʏ ᴏғ ᴍᴏɴᴇʏ (ʟɪϙᴜɪᴅɪᴛʏ) ɪɴ ᴛʜᴇ ᴇᴄᴏɴᴏᴍʏ.
➡️ Cᴇɴᴛʀᴀʟ Bᴀɴᴋ ᴀᴅᴍɪɴɪsᴛᴇʀs ᴄᴏɴᴛʀᴏʟ ᴏᴠᴇʀ ᴛʜᴇ ᴄʀᴇᴅɪᴛ ᴛʜᴀᴛ ᴛʜᴇ ᴄᴏᴍᴍᴇʀᴄɪᴀʟ ʙᴀɴᴋs ɢʀᴀɴᴛ.
➡️ Sᴜᴄʜ ᴀ ᴍᴇᴛʜᴏᴅ ɪs ᴜsᴇᴅ ʙʏ RBI ᴛᴏ ʙʀɪɴɢ "Eᴄᴏɴᴏᴍɪᴄ Dᴇᴠᴇʟᴏᴘᴍᴇɴᴛ ᴡɪᴛʜ Sᴛᴀʙɪʟɪᴛʏ".
➡️ Iᴛ ᴍᴇᴀɴs ᴛʜᴀᴛ ʙᴀɴᴋs ᴡɪʟʟ ɴᴏᴛ ᴏɴʟʏ ᴄᴏɴᴛʀᴏʟ ɪɴғʟᴀᴛɪᴏɴᴀʀʏ ᴛʀᴇɴᴅs ɪɴ ᴛʜᴇ ᴇᴄᴏɴᴏᴍʏ ʙᴜᴛ ᴀʟsᴏ ʙᴏᴏsᴛ ᴇᴄᴏɴᴏᴍɪᴄ ɢʀᴏᴡᴛʜ ᴡʜɪᴄʜ ᴡᴏᴜʟᴅ ᴜʟᴛɪᴍᴀᴛᴇʟʏ ʟᴇᴀᴅ ᴛᴏ ɪɴᴄʀᴇᴀsᴇ ɪɴ ʀᴇᴀʟ ɴᴀᴛɪᴏɴᴀʟ ɪɴᴄᴏᴍᴇ sᴛᴀʙɪʟɪᴛʏ.
➡️ Iɴ ᴠɪᴇᴡ ᴏғ ɪᴛs ғᴜɴᴄᴛɪᴏɴs sᴜᴄʜ ᴀs ɪssᴜɪɴɢ ɴᴏᴛᴇs ᴀɴᴅ ᴄᴜsᴛᴏᴅɪᴀɴ ᴏғ ᴄᴀsʜ ʀᴇsᴇʀᴠᴇs, ᴄʀᴇᴅɪᴛ ɴᴏᴛ ʙᴇɪɴɢ ᴄᴏɴᴛʀᴏʟʟᴇᴅ ʙʏ RBI ᴡᴏᴜʟᴅ ʟᴇᴀᴅ ᴛᴏ Sᴏᴄɪᴀʟ ᴀɴᴅ Eᴄᴏɴᴏᴍɪᴄ ɪɴsᴛᴀʙɪʟɪᴛʏ ɪɴ ᴛʜᴇ ᴄᴏᴜɴᴛʀʏ.