Question

What is Cash Reserve Ratio?

• A. Deposits of banks in government securities
• B. Rate at which banks borrow funds from the RBI
• C. Deposits (as cash) which banks have to keep/maintain with the RBI
• D. Rate at which RBI borrows money from the banks
• E. Rate at which RBI borrows money from the government

Answer 1

The correct option is C Deposits (as cash) which banks have to keep/maintain with the RBI

The Cash Reserve Ratio is the amount of funds that the banks are bound to keep with Reserve bank of India as a portion of their Net Demand and Time Liabilities (NDTL). The objective of CRR is to ensure the liquidity and solvency of the Banks.