Which of the following is/are the measure(s) taken by the Reserve Bank of India (RBI) to ease the liquidity crunch in the country?begin{enumerate}item Cut in Cash Reserve Ratio and Statutory Liquidity Ratio.item Increase the flow of foreign direct investment.item Supply of additional currency notes in the market.end{enumerate}

BANKING GENERAL KNOWLEDGE

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

Which of the following is/are the measure(s) taken by the Reserve Bank of India (RBI) to ease the liquidity crunch in the country?

A	Only 1
B	Only 2
C	Only 3
D	All the above

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: -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.

Detailed explanation-3: -The ratio of these liquid assets to the demand and time liabilities is called the Statutory Liquidity Ratio (SLR). The Reserve Bank of India (RBI) has the authority to increase this ratio by up to 40%. An increase in the ratio constricts the ability of the bank to inject money into the economy.

There is 1 question to complete.