BANKING AFFAIRS

BANKING GENERAL KNOWLEDGE

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

What is the full form of ‘CRR’ as used in banking sector?

A	Crucial Reserve Rate
B	Cash Reserve Ratio
C	Compulsory Return Rate
D	Credit and Reserve Ratio

Explanation:

Detailed explanation-1: -The Cash Reserve Ratio (CRR) is the percentage of total deposits a bank must have in cash to operate risk-free. The Reserve Bank of India decides the amount and is kept with them for financial security. The bank cannot use this amount for lending and investment purposes and does not get any interest from the RBI.

Detailed explanation-2: -Definition of CRR The cash reserve Ratio is a particular minimum amount of the total deposits of customer that needs to be maintained by the commercial bank as a reserve either is cash or as deposits with RBI. The CRR rate will be fixed as per the guidelines of the Central Bank.

Detailed explanation-3: -Along with repo rate, reverse repo rate, etc., Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) are crucial components of banking operations. The two ratios help determine the liquidity in the banking system and indicate national inflation and growth fluctuations.

There is 1 question to complete.