As we all know, the RBI has raised the Cash Reserve Ratio (CRR) by 25 bps, in April 201 0. What action will banks have to take to implement the same?begin{enumerate}item They will have to deposit some more money with the RBI as reserve money.item Banks will be required to give some more loan to projects of the priority sector.item Banks will be required to give a loan equivalent to the CRR to the Govt. of India for its day to day expenditure as and when required.end{enumerate}

BANKING GENERAL KNOWLEDGE

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

As we all know, the RBI has raised the Cash Reserve Ratio (CRR) by 25 bps, in April 201 0. What action will banks have to take to implement the same?

A	Only 1
B	Only 2
C	Only 3
D	Only 1 and 2

Explanation:

Detailed explanation-1: -So, When CRR is increased, it decreases money supply, Increases interest rates on home loans, car loans etc. and in inter-bank market, Increases demand for money and decreases inflation.

Detailed explanation-2: -When the RBI decides to increase the Cash Reserve Ratio, the amount of money that is available with the banks reduces. This is the RBI’s way of controlling the excess flow of money in the economy.

Detailed explanation-3: -Explanation: To the degree that it is compatible with the Banking Regulation Act of 1949, the Firms Act also applies to banking companies. The RBI’s increase in the cash reserve ratio (CRR) will result in: Reduce the amount of money in circulation in the economy.

There is 1 question to complete.