If RBI reduces the cash reserve ratio, what will happen to the credit creation ?

Correct option is C

When the Reserve Bank of India (RBI) reduces the Cash Reserve Ratio (CRR), commercial banks have more funds available to lend, thereby increasing credit creation in the economy.
Important Key Points:
1. CRR is the percentage of a bank's total deposits that must be kept in reserve with the central bank.
2. A lower CRR means banks can use more deposits for lending, increasing liquidity.
3. Increased lending can stimulate economic growth by supporting businesses and consumers.
4. Conversely, increasing the CRR can help control inflation by reducing the money supply.
Information Booster:
 No impact: This is incorrect because CRR changes directly affect the lending capacity of banks.
 Decrease: This is incorrect as a lower CRR increases the funds available for lending.
 None of these: Not applicable as the options provided cover the possible impacts.