BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The Bank Rate
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Open Market Operations
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Cash reserve requirements
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Statutory liquidity requirements
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Detailed explanation-1: -The different instruments of credit control used by the Reserve Bank of India are Statutory Liquidity Ratio (SLR), Cash Reserve Ratio (CRR), the Bank Rate Policy, Selective Credit Control (SCC), Open Market Operations (OMOs).
Detailed explanation-2: -Lowering or raising the minimum cash reserves maintained by the commercial banks.
Detailed explanation-3: -The Reserve Bank of India should increase the repo rate. An increase in repo rate increases the costs of borrowing from the central bank. It forces the commercial banks to increase their lending rates, which discourages borrowers from taking loans.
Detailed explanation-4: -Detailed Solution. The correct answer is It will increase. Cash Reserve Ratio (C. R. R.) refers to the number of money banks have to keep with the central bank. If RBI reduces the cash reserve ratio, credit creation will increase.