Question

Specifies the minimum fraction of the total deposits of customers, which commercial banks have to hold as reserves either in cash or as deposits with the Central Bank.

• A. Statutory Liquidity Ratio
• B. Cash Reserve Ratio
• C. Repo Rate
• D. Reverse Repo rate

Hint:

CRR controls liquidity in the economy by ensuring banks keep a fraction of deposits with the central bank.

Answer 1

The Correct Option is B

Step 1: Understand the terms.
- Cash Reserve Ratio (CRR): The minimum percentage of deposits banks are required to hold as cash with the RBI.
- Statutory Liquidity Ratio (SLR): The minimum percentage of deposits banks are required to maintain in approved securities.
- Repo Rate / Reverse Repo Rate: These are interest rates, and not reserve requirements.