Date Posted: 3/19/2018 2:44:42 PM
Posted By: Bom Membership Level: Bronze Total Points: 57
Central bank of kenya uses various ways to control credit in kenya and the ways put in place for credit control include:> Bank rate- is the interest charged on loans given to commercial banks by the central bank.It can be raised to reduce money in circulation or lowered to increase money in circulation> Open market operations-this involves the selling of government securities to reduce money in circulation or buying of such securities to increase money in circulation> Cash ratio-this is the amount of cash that commercial banks are required to maintain in their accounts with the central bank of Kenya. It can be lowered to increase money in circulation or lowered to reduce money in circulation> Compulsory deposits-This are the mandatory deposits commercial bank make with the central bank.Can be lowered to increase money in circulation or raised to reduce money in circulation> Selective credit control-this is where the central bank directs commercial banks to lend money to specific sectors of the economy> Margin requirement-this is where the central bank may direct commercial banks to accept securities of higher value for one to be advanced a loan as a measure of lowering money in circulation or accept securities of lower value than the loans to be advanced to increase money in circulation> Moral suasion-the central bank appeal to other financial institutions to exercise restraint in lending money to the public.
Next: Follow these tips and score a straight A in MathematicsPrevious: Types, effects and symptoms of computer virus
Get premium membership