- CRR is a monetary policy tool used by the RBI to control liquidity in the banking system. - Banks do not earn any interest on the balances held with the RBI under CRR. - It is a percentage of the bank's total deposits (NDTL).
The Cash Reserve Ratio refers to
Asked in UPSC CDS 1 2020 · Topic: Money & Banking (Monetary Policy: Objectives, Instruments (quantitative and qualitative), and Transmission Mechanism)
Show answer
Answer: B. the share of Net Demand and Time Liabilities that banks have to hold as balances with the RBI
More Economic Development questions
- Which of the following policies help to raise interest rate unambiguously and thereby lead to appreciation of currency?
- Which of the following indicators is/are used to observe the monetary transmission mechanism in the economy? 1. Weighted average lending rate 2. Weighted average domestic term deposit rate 3. 1-year median MCLR 4. SDF rate Select the correct answer using the code given below.
- Consider the following statements regarding instruments of monetary policy: 1. Standing deposit facility (SDF) rate was introduced in April 2022. 2. SDF rate replaced fixed reverse repo rate as the floor of the LAF corridor. Which of the statements given above is/are correct?
- The monetary policy in India uses which of the following tools? 1. Bank rate 2. Open market operations 3. Public debt 4. Public revenue Select the correct answer using the code given below.
- Which of the following action(s) by the Government would lead to contraction of money supply in the economy ? 1. Purchase of Treasury Bills by the central bank from public 2. Sale of Treasury Bills by the central bank to public 3. Sale of foreign exchange by the central bank 4. Purchase of foreign exchange by the central bank Select the correct answer using the code given below :
- Purchase of Treasury Bills by the central bank from public The central bank pays money to the public in exchange for securities. This injects money into the economy, increasing money supply (expansionary). 2. Sale of Treasury Bills by the central bank to public The central bank receives money from the public in exchange for securities.
- What is CRR? 1. It is a percentage of bank deposits that they keep with the RBI as gold deposits only 2. It is a deposit made by bank with RBI in the form of reserve or balances
- Which of the following is not related to monetary policy of the RBI?