Q. Consider the following statements regarding Cash Reserve Ratio (CRR):
1.It is the proportion of a bank’s total deposits that must be maintained as cash reserves with the RBI.
2.The central bank has the authority to adjust this ratio within certain limits.
Which of the statements given above is/are correct?
Answer: C
Notes:
Explanation: CRR is the proportion of a bank’s total deposits that must be maintained as cash reserves with the RBI. The central bank has the authority to adjust this ratio within certain limits.
A higher percentage indicates that banks have a smaller amount available for lending, which restricts liquidity. Conversely, a lower CRR has the opposite effect.
Source: FORUMIAS
