ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Call money is a method by which banks borrow from each other to be able to maintain the cash reserve ratio. The interest rate paid on call money loans is known as the call rate. It is a highly volatile rate.

Detailed explanation-2: -Banks Can Borrow From Other Banks Loans from banks to each other are also done on an overnight basis. Banks use their excess reserve balances to lend to other banks. The Federal Open Market Committee (FOMC) meets eight times a year to set the federal funds rate.

Detailed explanation-3: -Cash Reserve Ratio (CRR) is the share of a bank’s total deposit that is mandated by the Reserve Bank of India (RBI) to be maintained with the latter as reserves in the form of liquid cash.

Detailed explanation-4: -Both CRR and SLR are crucial to the economy as they maintain cash flow and regulate liquidity in the country. These financial rates have an undeniable impact on the loan market of the country. The rates also change as per the changes in the economic climate of the country.

Detailed explanation-5: -Ans. Cash Reserve Ratio (CRR) is the percentage of money, which a bank has to keep with RBI in the form of cash. Whereas, Statutory Liquidity Ratio (SLR) is the proportion of liquid assets to time and demand liabilities.