Qualitative measures:

1. Collateral security:

• When bank lends money to individual, it demands some asset as mortgage for security of the loan. This is known as collateral security.
• This security can be jewelry, fixed deposits, car, house, land, etc.
• RBI promotes and encourages commercial banks to take such steps so that all the segments of people especially poor in India can attain the benefit of bank credit and hence help to improve country’s economy.

2. Margin requirement:

• Margin requirement is the limit that is set by RBI for granting loans against security.
• An individual is offered only certain percentage of the total value of the asset (security) as loan.

3. Ceiling on credit:

• RBI fixes a limit on the loans that the commercial banks can give to the people.
• In other words, commercial banks cannot exceed the maximum limit (ceiling) that the RBI has fixed for specific categories.

4. Discriminatory interest rates:

• Banks charges different rate of interest on different types of loans and advances and also charges differently to different economic class of people.
• For example, the bank may charge less interest rate on the loan given to a farmer for agricultural development and may charge more interest rate on the loan given to a businessman.