Selective or Qualitative methods of credit
control aim at regulating and controlling the allocation of credit among
various users rather than influencing the general availability of credit.
These
are broadly explained below:
1) Margin
Requirement:
The
commercial banks generally give loans to their customers against some
securities. They do not give loans equal to the full amount of the value of
security, but of an amount which is less than its value.
The
margin requirement of loans refers to the difference between the current value of
the security offered for loans and the value of loans granted.
