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With whom is the Cash Reserve Ratio (CRR) kept?
Question

With whom is the Cash Reserve Ratio (CRR) kept?

A.

Reserve Bank of India

B.

International Monetary Fund

C.

Finance Commission of India

D.

Comptroller and Auditor General of India

Correct option is A

The correct answer is: (a) Reserve Bank of India

Explanation:

  • The Cash Reserve Ratio (CRR) is the percentage of a commercial bank's total deposits that it must keep in the form of reserves, either in cash or with the Reserve Bank of India (RBI).

  • The RBI determines and regulates the CRR to control the liquidity and credit creation in the economy, making it an essential tool for monetary policy.

Information Booster:
• CRR is used to control inflation and ensure stability in the financial system.
• The CRR is kept with the RBI in the form of liquid cash.
• It is a part of the Statutory Liquidity Ratio (SLR), which mandates the maintenance of certain reserves by commercial banks.
• Changes in the CRR influence the lending capacity of banks, thus impacting the money supply.
• The CRR is reviewed periodically by the RBI as part of the monetary policy.

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