Controller of Credit

The system through which diverse businesses and central banks ensure that credit is given only to those individuals who are most likely to repay it is known as credit control. Credit controllers manage the process of lending through thorough calculation and risk management. 

Importance of Credit Control

It is important to understand the need for controlling credit to better grab the concepts related to it. Here are a few pivotal functions that credit control plays:

• It can help in the holistic growth of those sectors of the economy which are recognized by the government as ‘prioritised’ based on their economic condition or government interest.
• It also helps in keeping a check over the channelization of credit such that credit is not being delivered or used for objectionable goals. 
• Credit control also helps in achieving the goal of deflation along with inflation. 
• The expansion in the economy by promoting the flow of bank credit to different sectors is also facilitated by credit control. 
• Overall development of the economy also takes place with the help of credit control.

These are a few ways through which credit control helps in the development of the economy. 

Role of RBI in Credit Control

The Reserve Bank of India (RBI) is the central bank of India which manages the issue and circulation of the Indian Rupee. RBI helps in maintaining the economic structure of the country. It serves a whole lot of functions and credit control is one of the core functions of RBI. Quantitative and qualitative methods are the two crucial ways through which RBI ensures proper credit control. 

Methods of Credit Control

• Time and again some changes are made in the credit-control measures to ensure proper functioning and development of the economy with the changing needs of individuals. Depending on the economic needs, RBI uses quantitative and qualitative methods. Sometimes more quantitative methods can be used whilst sometimes more qualitative methods can be used. The tools used to regulate the credit-control include Bank Rate, Cash Reserve Ratio, Repo Rate etc. 
• The quantitative tools of credit control can be used for the entire money and banking system with no biases. These include reserve ratio, bank rate policy etc. 
• On the other hand, the qualitative tools for credit control can be discriminatory in nature and used for particular goals. 
• RBI can give particular instructions to banks to not give loans to certain businesses. This helps in restraining the hoarding of commodities using money that is borrowed from banks. 

Conclusion

The concept of credit control revolves around the ways through which banks give credit to those who ask for it and the factors depending on which the banks make their decision. The Reserve Bank of India plays a crucial role in maintaining the economy of the country and one of the ways through which RBI facilitates the development of the economy is credit control. There are various methods used for credit control and these are mainly divided into quantitative methods and qualitative methods. Depending on the requirement and the needs of the economy the methods are used. The process of credit control ensures that the growth of the economy is promoted and hoarding of loans from banks for unnecessary causes can be restricted. Overall, it can be concluded that credit control is an important concept that helps in promoting the economy of the country in some way or the other.