Write Short Notes on:
Cash Reserve Ratio(CRR).
Cash Reserve Ratio(CRR).
Cash Reserves Ratio
(CRR) refers to the proportion of total deposits of the commercial banks
which they must have kept as cash reserves with the central bank in the form of
cash.
The cash reserve ratio is determined by the central bank so that it can be used as a quantitative instrument to control
the amount of credit creation by the commercial banks at the time of inflation
or deflation in the economy.
During inflation, the cash reserve ratio is increased to reduce the total money supply in the economy by
reducing the amount of credit creation by the commercial banks and during deflation, the cash reserve ratio is decreased to increase the total money supply in the economy
by increasing the amount of credit creation by the commercial banks
Cash Reserves Ratio
(CRR) refers to the proportion of total deposits of the commercial banks
which they must have kept as cash reserves with the central bank in the form of
cash.
The cash reserve ratio is determined by the central bank so that it can be used as a quantitative instrument to control
the amount of credit creation by the commercial banks at the time of inflation
or deflation in the economy.
During inflation, the cash reserve ratio is increased to reduce the total money supply in the economy by
reducing the amount of credit creation by the commercial banks and during deflation, the cash reserve ratio is decreased to increase the total money supply in the economy
by increasing the amount of credit creation by the commercial banks
