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The fraction of deposits kept as Cash Reserves by the commercial banks with themselves is called
- a)SLR
- b)LLR
- c)RR
- d)CRR
Correct answer is option 'D'. Can you explain this answer?
Most Upvoted Answer
The fraction of deposits kept as Cash Reserves by the commercial banks...
Definition of CRR
The Cash Reserve Ratio (CRR) is the fraction of deposits that commercial banks keep as reserves with themselves, either in cash or as deposits with the RBI. It is a monetary policy tool used by the central bank to regulate the money supply in the economy.
Importance of CRR
The CRR is an important tool for the RBI to regulate liquidity in the economy. By increasing the CRR, the RBI reduces the amount of money that commercial banks can lend, thereby reducing the money supply in the economy. Similarly, by decreasing the CRR, the RBI increases the amount of money that commercial banks can lend, thereby increasing the money supply in the economy.
Impact of CRR
The impact of CRR on the economy is significant. If the CRR is high, banks will have less money to lend, which can lead to a decrease in economic growth. On the other hand, if the CRR is low, banks will have more money to lend, which can lead to inflation.
Conclusion
In conclusion, the CRR is an important tool for the RBI to regulate the money supply in the economy. It is the fraction of deposits that commercial banks keep as reserves with themselves, either in cash or as deposits with the RBI. The impact of CRR on the economy is significant, and it is important for the RBI to use this tool wisely to achieve its monetary policy objectives.
The Cash Reserve Ratio (CRR) is the fraction of deposits that commercial banks keep as reserves with themselves, either in cash or as deposits with the RBI. It is a monetary policy tool used by the central bank to regulate the money supply in the economy.
Importance of CRR
The CRR is an important tool for the RBI to regulate liquidity in the economy. By increasing the CRR, the RBI reduces the amount of money that commercial banks can lend, thereby reducing the money supply in the economy. Similarly, by decreasing the CRR, the RBI increases the amount of money that commercial banks can lend, thereby increasing the money supply in the economy.
Impact of CRR
The impact of CRR on the economy is significant. If the CRR is high, banks will have less money to lend, which can lead to a decrease in economic growth. On the other hand, if the CRR is low, banks will have more money to lend, which can lead to inflation.
Conclusion
In conclusion, the CRR is an important tool for the RBI to regulate the money supply in the economy. It is the fraction of deposits that commercial banks keep as reserves with themselves, either in cash or as deposits with the RBI. The impact of CRR on the economy is significant, and it is important for the RBI to use this tool wisely to achieve its monetary policy objectives.
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The fraction of deposits kept as Cash Reserves by the commercial banks...
Cash Reserve Ratio is a specified minimum fraction of the total deposits of customers, which commercial banks have to hold as reserves with the central bank.
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The fraction of deposits kept as Cash Reserves by the commercial banks with themselves is calleda)SLRb)LLRc)RRd)CRRCorrect answer is option 'D'. Can you explain this answer?
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The fraction of deposits kept as Cash Reserves by the commercial banks with themselves is calleda)SLRb)LLRc)RRd)CRRCorrect answer is option 'D'. Can you explain this answer? for Commerce 2025 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about The fraction of deposits kept as Cash Reserves by the commercial banks with themselves is calleda)SLRb)LLRc)RRd)CRRCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for Commerce 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The fraction of deposits kept as Cash Reserves by the commercial banks with themselves is calleda)SLRb)LLRc)RRd)CRRCorrect answer is option 'D'. Can you explain this answer?.
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