What are the instruments of credit control? Check Answer at BYJU’S (2024)

FAQs

What are the instruments of credit control? Check Answer at BYJU’S? ›

The instruments of Credit Control are Cash Reserve Ratio (CRR), Statutory Liquidity Ratio (SLR), Bank Rate, Selective Credit Control (SCC), and Open Market Operations (OMOs).

The different instruments of credit control used by the Reserve Bank of India are Statutory Liquidity Ratio (SLR), Cash Reserve Ratio (CRR), the Bank Rate Policy, Selective Credit Control (SCC), Open Market Operations (OMOs).

A credit instrument is a promissory note or other written evidence of a debt. Common examples include bonds, loans, checks, or invoices. Credit instruments are used by governments, companies, and individuals alike. [Last updated in July of 2022 by the Wex Definitions Team]

Bank rate is the selective credit control measure used by the central bank of the country.

These include bank rate policy, open market operations, Statutory Liquidity Ratio, Repo rate, Reverse Repo rate and Cash Reserve Ratio.

Out of the given options, managed floating is not an instrument of credit control.

The RBI uses quantitative methods like bank rate, open market operations, cash reserve ratio, and statutory liquidity ratio to control the total volume of credit.

The four types of credit market instruments are certificates of deposit, savings accounts, money market accounts, and lines of credit.

Bank credit instruments are important financial instruments used to help facilitate capital flows between borrowers and lenders. These instruments provide borrowers with access to capital and lenders with a safe and secure way to invest their funds.

For the rating purpose, credit rating agencies analyze the business risk, financial risk, and credit risk of the company they rate. Some of the financial instruments that the credit rating agencies rate are Non-Convertible Debentures (NCDs), Fixed Deposits (FDs), Company Deposits (CDs), etc.

Which of the following is a qualitative instrument of credit control? ›

The correct answer is Moral Suasion. Moral suasion is a qualitative measure of credit control used by the Reserve Bank of India. It is a persuasive technique used by the central bank to influence the behavior of the commercial banks.

Qualitative or selective credit control measures are used to regulate the flow of credit. These include Margin Requirements, Consumer Credit Regulation, Rationing of credit, Moral Suasion etc.

Qualitative instruments are also known as selective instruments of the RBI's monetary policy. These instruments are used for discriminating between various uses of credit; for example, they can be used for favouring export over import or essential over non-essential credit supply.

Influencing interest rates, printing money, and setting bank reserve requirements are all tools central banks use to control the money supply. Other tactics central banks use include open market operations and quantitative easing, which involve selling or buying up government bonds and securities.

If your customers take longer than your payment terms stipulate to pay your invoices, you will need to chase them up for payment, for example by phoning them to remind them about the invoice, or by sending them an email reminder. This is called credit control.

Credit-mitigating financial instruments fall into two general categories—credit derivatives and collateralized debt obligations (CDOs). Credit derivatives permit lenders to insure against changes in a borrower's credit quality without removing the reference credit from their balance sheets.