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Economics: MCQ Objective Questions
The ratio of a bank's cash holdings to its total deposit liabilities is called the(A). Variable Reserve Ratio
(B). Cash Reserve Ratio ✅
(C). Statutory Liquidity Ratio
(D). Minimum Reserve Ratio
Detailed Explanation - Economics MCQ
◾Cash Reserve Ratio (CRR) is the amount of funds that the banks have to keep with the RBI.
◾If the central bank decides to increase the CRR, the available amount with the banks comes down.
◾The RBI uses the CRR to drain out excessive money from the system.
◾A bank cannot earn interest on this liquid cash maintained with the RBI.
◾A bank cannot use this for investing and lending purposes.
