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Quantitative Methods of Credit Control (in Hindi)
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Here Navdeep Kaur is discussing Qualitative methods of Credit Control

Navdeep Kaur is teaching live on Unacademy Plus

Navdeep Kaur
NET qualified with over 6 years of teaching experience. JRF Awardee & Expert in NTA UGC NET.

Unacademy user
thanks sirji very much
NHB means national housing bank
Mam kya yeh notes sufficient hai paper ke liye.books pdne ki jroorat toh nhi mam
Mam kya ye notes sufficient hai ya phir books bhi pdne pdegi
Mam kya 2month mei preparation ho skti hai 1st attempt mei
  1. Banking and Financial Institutions With MCQs RBI Methods of credit control By Navdeep Kaur


  2. II. Qualitative Method: The qualitative or selective methods of credit control are adopted by the Central Bank in its pursuit of economic stabilisation and as part of credit management. (i) Margin Requirements: Changes in margin requirements are designed to influence the flow of credit against specific commodities. The commercial banks generally advance loans to their customers against some security or securities offered by the borrower and acceptable to banks


  3. More generally, the commercial banks do not lend up to the full amount of the security but lend an amount less than its value. The margin requirements against specific securities are determined by the Central Bank. A change in margin requirements will influence the flow of credit. A rise in the margin requirement results in a contraction in the borrowing value of the security and similarly, a fall in the margin requirement results in expansion in the borrowing value of the security.


  4. (i) Credit Rationing: Rationing of credit is a method by which the Central Bank seeks to limit the maximum amount of loans and advances and, also in certain cases, fix ceiling for specific categories of loans and advances. (iii) Regulation of Consumer Credit: Regulation of consumer credit is designed to check the flow of credit for consumer durable goods. This can be done by regulating the total volume of credit that may be extended for purchasing specific durable goods and regulating the number of installments through which such loan can be spread. Central Bank uses this method to restrict or liberalise loan conditions accordingly to stabilise the economy.


  5. (iv) Moral Suasion: Moral suasion and credit monitoring arrangement are other methods of credit control. The policy of moral suasion will succeed only if the Central Bank is strong enough to influence the commercial banks In India, from 1949 onwards, the Reserve Bank has been successful in using the method of moral suasion to bring the commercial banks to fall in line with its policies regarding credit. Publicity is another method, whereby the Reserve Bank marks direct appeal to the public and publishes data which will have sobering effect on other banks and the commercial circles.


  6. (v) Method of Publicity: In modern times, Central Bank in order to make their policies successful, take the course of the medium of publicity. A policy can be effectively successful only when an effective public opinion is created in its favour Its officials through news-papers, journals, conferences and seminar's present a correct picture of the economic conditions of the country before the public and give a prospective economic policies. In developed countries Commercial Banks automatically change their credit creation policy. But in developing countries Commercial Banks being lured by regional gains. Even the Reserve Bank of India follows this policy.


  7. (vi) Direct Action: Under this method if the Commercial Banks do not follow the policy of the Central Bank, then the Central Bank has the only recourse to direct action. This method can be used to enforce both quantitatively and qualitatively credit controls by the Central Banks. This method is not used in isolation; it is used as a supplement to other methods of credit control. Direct action may take the form either of a refusal on the part of the Central Bank to re-discount for banks whose credit policy is regarded as being inconsistent with the maintenance of sound credit conditions. Even then the Commercial Banks do not fall in line, the Central Bank has the constitutional power to order for their closure. This method can be successful only when the Central Bank is powerful enough and has cordial relations with the Commercial Banks. Mostly such circumstances are rare when the Central Bank is forced to resist to such measures.


  8. Effectiveness of Credit Control Measures: The effectiveness of credit control measures in an economy depends upon a number of factors. First, there should exist a well-organised money market. Second, a large proportion of money in circulation should form part of the organised money market. Finally, the money and capital markets should be extensive in coverage and elastic in nature. Extensiveness enlarges the scope of credit control measures and elasticity lends it adjustability to the changed conditions. In most of the developed economies a favourable environment in terms of the factors discussed before exists, in the developing economies, on the contrary, economic conditions are such as to limit the effectiveness of the credit control measures.


  9. NBFIs Regulated By Regulated B Regulated By Regulated by Regulated by Regulated by State Govt RBI NHB SEBI RDA 1. Nidhi Companies 2. Mutual Benefit Companies 1. AFCS 2. LCs 3. ICs 4. IFCs 5. CICS 6. IDF NBFC 7. NBFC-MFis 8. Factoring 9. MGCS 10. RNBCs Housing Finance 1. Merchant Banking Chit Fund Companies Insurence Companies Companies Companies 2. Venture Capital Fund Companies 3. Stock Broking 4. Collective Investment Schemes


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  11. Banking and Financial Institutions With MCQs NABARD By Navdeep Kaur


  12. NABARD was established on the recommendations of B.Sivaraman Committee, (by Act 61, 1981 of Parliament) on 12 July 1982 to implement the National Bank for Agriculture and Rural Development Act 1981. It replaced the Agricultural Credit Department (ACD) and Rural Planning and Credit Cell (RPCC) of Reserve Bank of India, and Agricultural Refinance and Development Corporation (ARDC) Capital structure: The initial corpus of NABARD was Rs.100 crores. Consequent to the revision in the composition of share capital between Government of India and RBI, the paid up capital as on 31 May 2017, stood at Rs.6,700 crore with Government of India holding Rs 6,700 crore (100% share). The authorized share capital is Rs.30,000 crore.


  13. Roles: 1.NABARD is the most important institution in the country which looks after the development of the cottage industry, small scale industry and village industry, and other rural industries. 2.NABARD also reaches out to allied economies and supports and promotes integrated development. 3.NABARD discharge its duty by undertaking the following roles: . Serves as an apex financing agency for the institutions providing investment and production credit for promoting the various developmental activities in rural areas Takes measures towards institution building for improving absorptive capacity of the credit delivery system, including monitoring, formulation of rehabilitation schemes, restructuring of credit institutions, training of personnel, etc


  14. NABARD is also known for its 'SHG Bank Linkage Programme' which encourages India's banks to lend to self-help groups (SHGs). Largely because SHGs are composed mainly of poor women, this has evolved into an important Indian tool for microfinance. By March 2006, 22 lakh SHGs representing 3.3 core members had to be linked to credit through this programme NABARD also has a portfolio of Natural Resource Management Programmes involving diverse fields like Watershed Development, Tribal Development and Farm Innovation through dedicated funds set up for the purpose.


  15. The purpose of RIDF is to promote innovation in rural & agricultural sector through viable means. Effectiveness of the program depends upon many factors, but the type of organization to which the assistance is extended is crucial one in generating, executing ideas in optimum commercial way. Cooperative is member driven formal organization for socio-economic purpose, while SHG is informal one. NGO have more of social color while that of PRI is political one. Does the legal status of an institute influences effectiveness of the program? How & to what an extent? Cooperative type of organization is better (Financial efficiency & effectiveness) in functioning (agriculture & rural sector) compared to NGO, SHG & PRIs. Recently in 2007-08, NABARD has started a new direct lending facility under Umbrella Programme for Natural Resource Management' (UPNRM). Under this facility financial support for natural resource management activities can be provided as a loan at reasonable rate of interest. Already 35 projects have been sanctioned involving loan amount of about Rs 1000 crore. The sanctioned projects include honey collection by tribals in Maharashtra, tussar value chain by a women producer company ('MASUTA"), eco-tourism in Karnataka


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  17. Banking and Financial Institutions With MCQs RRB By Navdeep Kaur


  18. Regional Rural Banks are local level banking operating in different States of India. They have been created with a view to serve primarily the rural areas of India wit!h basic banking and financial services. However, RRBs may have branches set up for urban operations and their area of operation may include urban areas too. The area of operation of RRBs is limited to the area as notified by Government of India covering one or more districts in the State. RRBs also perform a variety of different functions. RRBs perform various functions in following heads: Providing banking facilities to rural and semi-urban areas Carrying out government operations like disbursement of wages of MGNREGA workers, distribution of pensions etc. Providing Para-Banking facilities like locker facilities, debit and credit cards.