Qualitative measures includes those measures of central bank which controls the direction of credit creation in economy.
They are also termed as selective measures. It includes :
(i) Margin Requirement : The difference between the value of security and the amount of loan sanctioned is known as margin requirement. By changing the margin requirement Central bank can increase or decrease the credit creation in desired directions. If Central bank wants to increase the credit in a particular use then it will decrease the margin requirement for that use.
(ii) Consumer Credit : Loans given by commercial banks to the consumers to purchase the durable consumer goods, are known-as consumer’s credit. Central bank can make the loans attractive or unattractive by following way :- (a) By changing the minimum down payments, (b) By changing the maximum period of repayment. (installment)
(iii) Differentiated Rate of Interest : Central bank can decide different interst rates for different uses to affect the direction of credit. Central bank will increase the rate of interst for those uses where it wants to discourage the credit and will decrease the rate of interst for those uses where it wants to encourage the credit.
