Quantitative measures adopted by RBI to credit control :
(i) Bank Rate : RBI can control the volume of bank credit by changing the bank rate. The bank rate and the rate of interest charged by commercial banks on their loans to their customers are interrelated. Therefore, by making appropriate changes in the bank rate the RBI can control the volume and cost of credit indirectly. Increase in the bank rate would lead to a corresponding increase in the rate of interest charged by the commercial banks on their loans. Thus, a higher cost of borrowing from the commercial banks would reduce the amount of credit borrowed by people from them.
(ii) Cash Reserve Ratio : Commercial banks are required by law to keep a certain percentage of their deposits with RBI in the form of cash reserve. RBI has the power to vary the cash reserve ratio. An increase in the cash reserve ratio, the cash reserve with the commercial banks is reduced. Therefore, the commercial banks will be in a position to create only a smaller volume of credit.