ROLE OF RBI IN CREDIT CONTROL (KEY IJP************113)

• Arshia Gupta

Abstract

The Reserve Bank of India (RBI) plays a crucial role in the economic stability of the country through its credit control mechanisms. This paper examines the various tools and strategies employed by the RBI to regulate the availability of credit in the economy and ensure a balanced financial environment. The research outlines the significance of monetary policy, which includes both quantitative and qualitative measures, in influencing interest rates and controlling inflation. Tools such as the Cash Reserve Ratio (CRR), Statutory Liquidity Ratio (SLR), and repo rates are analyzed to illustrate how they affect the lending capacity of commercial banks. This paper also explores the impact of RBI's credit control policies on different sectors, highlighting the challenges faced during periods of economic volatility, such as during the COVID-19 pandemic. Furthermore, the role of RBI in promoting financial inclusion and fostering economic growth through credit access is discussed. The findings suggest that a well-calibrated approach to credit control by the RBI can not only stabilize the economy but also stimulate growth in key sectors. This study underscores the importance of adaptive credit control measures in response to evolving economic conditions, thereby reinforcing the pivotal role of the RBI in India's financial landscape.