Monetary policy tools are broadly classified into direct and indirect instruments. Direct tools might include selective credit controls or prescribing lending rates. Indirect tools, like CRR, Statutory Liquidity Ratio (SLR), Repo Rate, Reverse Repo Rate, and Open Market Operations (OMO), work through market mechanisms or by influencing the banks' ability to create credit. CRR influences credit creation by reducing the funds available with banks for lending.
Cash reserve ratio (CRR) as an instrument of credit control is,
Asked in WBCS Main Paper 5 2021 · Topic: Money & Banking (Monetary Policy: Objectives, Instruments (quantitative and qualitative), and Transmission Mechanism)
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