Sunday, February 8, 2009

Objectives of Credit Control

The central bank makes efforts to control the expansion or contraction of credit in order to keep it at the required level with a view to achieving the following ends.

1. To save Gold Reserves: The central bank adopts various measures of credit control to safe guard the gold reserves against internal and external drains.

2. To achieve stability in the Price level: Frequently changes in prices adversely affect the economy. Inflationary and deflationary trends need to be prevented. This can be achieved by adopting a judicious of credit control.

3. To achieve stability in the Foreign Exchange Rate: Another objective of credit control is to achieve the stability of foreign exchange rate. If the foreign exchange rate is stabilized, it indicates the stable economic conditions of the country.

4. To meet Business Needs: According to Burgess, one of the important objectives of credit control is the “Adjustment of the volume of credit to the volume of Business” credit is needed to meet the requirements of trade an industry. So by controlling credit central bank can meet the requirements of business.

No comments:

Post a Comment