These days’ regulation and control of volume of credit is the most important function of central bank. The volume of credit is an essential part of money supply.
Therefore, for controlling the volume of money supply, control of volume of credit is necessary. By bringing about changes in the volume of credit, various types of changes can be brought about in an economy, such as maintaining price stability and promoting economic development.
Methods of Credit Control:
The following are the methods of credit control:
(i) Bank Rate
(ii’) Open Market Operations
(iii) Change in Reserve Ratio
(iv) Changes in Margin Requirement
(v) Moral Suasion
(vi) Selective Credit Control