Which of the following regarding Cash Reserve Ratio or CRR is true?1.

1.	Which of the following regarding Cash Reserve Ratio or CRR is true?1. It is certain minimum amount banks have to keep with them in reserve.2. It can be kept in form of Gold or government's security papers.3. It is the minimum amount banks deposits with the Reserve bank of India.4. Increase in CRR increases money circulation in Indian economy
Answer» Correct Answer - Option 3 : It is the minimum amount banks deposits with the Reserve bank of India. The correct answer is It is the minimum amount banks deposit with the Reserve bank of India. Cash Reserve Ratio or CRR is the minimum amount banks have to deposit or keep with the Reserve Bank of India (RBI), and not with themselves. CRR is kept in form of cash and Banks earn no interest in these deposits. CRR is primarily for the purpose of security of depositors' savings by reserving part of the money with the central bank. Another function of CRR is as a tool to control monetary policy by the RBI. Thus, when inflation (price rise) is positive, the raising of CRR reduces available funds with the banks to lend, and hence reduces the circulation of money in the economy. Other information: CRR is decided by the RBI's Monetary Policy Committee. Currently, CRR is 3%.

Which of the following regarding Cash Reserve Ratio or CRR is true?1. It is certain minimum amount banks have to keep with them in reserve.2. It can be kept in form of Gold or government's security papers.3. It is the minimum amount banks deposits with the Reserve bank of India.4. Increase in CRR increases money circulation in Indian economy

Answer» Correct Answer - Option 3 : It is the minimum amount banks deposits with the Reserve bank of India.

The correct answer is It is the minimum amount banks deposit with the Reserve bank of India.

Cash Reserve Ratio or CRR is the minimum amount banks have to deposit or keep with the Reserve Bank of India (RBI), and not with themselves.

CRR is kept in form of cash and Banks earn no interest in these deposits.
CRR is primarily for the purpose of security of depositors' savings by reserving part of the money with the central bank. Another function of CRR is as a tool to control monetary policy by the RBI. Thus, when inflation (price rise) is positive, the raising of CRR reduces available funds with the banks to lend, and hence reduces the circulation of money in the economy.
Other information: CRR is decided by the RBI's Monetary Policy Committee. Currently, CRR is 3%.