What is the Meaning of Credit Control?


Credit control implies the following:

(a) Restricting the volume of credit created by the commercial banks.

(b) Regulating the volume of credit.


(c) Directing the credit to the productive purposes, and

(d) Introducing measures for strengthening the banking structure.

Hence, credit controls has become essential for the economic well being of the country. The effective credit control measures will bring the following:

(i) Stability in the price level.


(ii) Mitigation of effects of trade cycle both during inflation and deflation periods.

(iii) Stability in foreign exchange rates and thereby maintaining the external value of the currency.

(iv) Stabilization of the money market through liquidity control measures, (u) Promotion of overall economic development.

(vi) National interest is protected.

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