DEPARTMENT OF TECHNICAL EDUCATION

ANDHRA PRADESH
Name Staff Member : P. BADARINARAYANA
Designation : Sr. Lecturer
Branch : DCCP
Institute : Govt. Polytechnic, NELLORE
Year/Semester : VI Semester
Subject : BANKING II
Sub. Code : CCP-604(B)
Topic : Reserve Bank of India
Duration : 50 Mts.
Sub Topic : Qualitative controls of RBI
Teaching Aids : Animations
CCP604(B)53 1
Objective :

On completion of this period, you would be

able to
 Comprehend the Qualitative Controls of
Reserve Bank of India.

CCP604(B)53 2
Recap

In the last lesson we have seen

 The Bank Rate Policy of Reserve Bank of
India.
 Today we will see the Qualitative Controls of
Reserve Bank of India.

CCP604(B)53 3
Qualitative Controls of Reserve Bank

 To encourage better economic activities which are

essential for development and
 To discourage the activities, which are harmful for
economic stability and sustained growth of the
economy
 The RBI controls the credit flow through banks by
qualitative credit control.

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Qualitative Controls of Reserve Bank…

 The objective of qualitative credit control is to

prevent speculative holding of food grains and
basic raw materials, which are sensitive or in short
supply and to check undue rise in their prices.
 The commodities covered under the qualitative
credit control are food grains like cereals and
pulses, oil seeds, Vanaspati and all imported oil
seeds and vegetable oil, sugar, cotton.

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Qualitative Controls of Reserve Bank…

 With a view to curtail hoarding capacity of such

traders, the RBI stipulates higher rate of margins
to be maintained in respect of advances allowed
against commodities covered under this
qualitative control.

 The rate of margin in respect of these

commodities is revised by the RBI from time to
time depending upon the supply position of these
commodities.
CCP604(B)53 6
Qualitative Controls of Reserve Bank…

 It is necessary for banks to obtain prior

permission of RBI for granting loans, in excess
of the prescribed ceiling, to new borrowers
 Also for enhancing credit limits given to the
existing borrowers falling with in purview of
Qualitative Credit Control.

CCP604(B)53 7
Summary:

Today we have seen the Qualitative Credit Controls

of Reserve Bank of India.

CCP604(B)53 8
Frequently Asked Questions

1. Explain the Qualitative Credit Controls of Reserve

Bank of India.

CCP604(B)53 9