Question

Q20) Cash reserve ratio (CRR),Identify the wrong statement

• A. a) Is 4% of the total deposits held by the banks
• B. b) Earns interest
• C. c) There is no floor or cap on the CRR rates
• D. d) Co-operative banks are also required to maintain CRR

Answer 1

The correct option is B

b) Earns interest

Ans: D
Explanation: CRR does not earn interest on it, SLR does. The RBI act of 1934 fixed 3% and 20% as floor and cap of CRR rates. However, the 2007 amendment to the RBI act removed both the floor and cap rates. Co-operative banks maintain CRR and SLR but lesser than the commercial banks