Cash Reserve Ratio (CRR) is the percentage of a bank's Net Demand and Time Liabilities (NDTL) that it must keep as reserves with the Reserve Bank of India (RBI). An increase in CRR means banks have to set aside a larger portion of their deposits with the RBI, which reduces the amount of funds they have available for lending to customers.
When RBI announced on increase in Cash Reserve Ratio (CRR) then what does it mean ?
Asked in CGPSC Prelims Exam 2017 · Topic: Money & Banking (Monetary Policy: Objectives, Instruments (quantitative and qualitative), and Transmission Mechanism)
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Answer: C. The commercial bank will have less money to lend
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