Question

The Reserve Bank of India having regard to the needs of securing the monetary stability in the country, prescribes the CRR (Cash Reserve Ratio). Which of the following most closely explains this ratio ?

• A. percentage of bank’s total deposits that is required to be maintained either in cash or as deposits with the Reserve Bank of India
• B. minimum rate at which Reserve Bank of India lends funds to commercial bank
• C. minimum percentage of net profit to cash flow over that banks require to maintain over a financial year
• D. maximum percentage of deposits that can be extended as loans by a bank at any given point of time

Answer 1

Answer: (A)

percentage of bank’s total deposits that is required to be maintained either in cash or as deposits with the Reserve Bank of India

Answer 2

The correct option is (A): percentage of bank’s total deposits that is required to be maintained either in cash or as deposits with the Reserve Bank of India