What is Selective Credit Control?

Question

What is Meant by Selective Credit Control? Or, Define the Selective Credit Control?

Answer 1

It refers to discriminatory policy of the central bank relating to select sectors of the economy. Flow of credit to certain sector (Priority Sectors) may be encouraged with a view to stimulating production in these sectors. This is a positive application of selective credit controls. On the other hand, the central bank may decide to restrict the availability of certain (non-priority) sector. Generally, during period of inflation, availability of credit for speculative activities (like storage of food grains) is discouraged. This is in negative application of the selective credit.