BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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It increases the rate of taxes
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It increases cash reserve ratio
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It increases the imports
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It increases the public debt
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Detailed explanation-1: -Detailed Solution. Financial inclusion is the delivery of financial services at affordable costs to vast sections of disadvantaged and low income groups. It is not a measure to control inflation.
Detailed explanation-2: -Monetary Policy Measures Similar process follows when CRR, SLR, Repo Rates are increased and decreased. Rates like CRR, SLR, Repo Rate and Reverse Repo Rate are increased to impact the money supply in the economy by the RBI to control inflation.
Detailed explanation-3: -Cash Reserve Ratio and inflation: CRR is part of RBI’s monetary policy which helps eliminate liquidity risk and regulate money supply in the economy. In the case of inflation, RBI increases the CRR due to which interest rate increases, and the capacity of banks to lend also decreases.
Detailed explanation-4: -CRR helps control inflation. In a high inflation environment, RBI can increase CRR to prevent banks from lending more. CRR also ensures banks have a minimum amount of funds readily available to customers even during huge demand. CRR serves as the reference rate for loans.