Question

Briefly explain the following credit control methods adopted by the Central Bank.

Moral persuasion 

Answer 1

1. Under this method, the central bank adopts the policy of persuasion and moral influence on the commercial banks in order to get them to fall in line with its policy.
2. The central bank frequently announces its policy and urges the commercial banks to adopt it.
3. This is exercised through letters, discussions and directives to the banks.
4. The member banks generally do not ignore the advice of the central bank.