The Cash Reserve Ratio refers to

Join Our Telegram Channel

the share of Net Demand and Time Liabilities that banks have to hold as liquid assets

the share of Net Demand and Time Liabilities that banks have to hold as balances with the RBI

the share of Net Demand and Time Liabilities that banks have to hold as part of their cash reserves

the ratio of cash holding to reserves of banks

Answer is Right!

Answer is Wrong!

This question was previously asked in

UPSC CDS-1 – 2020

Download PDF Attempt Online

The Cash Reserve Ratio (CRR) is the portion of a bank’s Net Demand and Time Liabilities (NDTL) that it must maintain as a balance with the Reserve Bank of India (RBI). This is a mandatory requirement set by the RBI. Option B accurately describes this.

– CRR is a monetary policy tool used by the RBI to control liquidity in the banking system.
– Banks do not earn any interest on the balances held with the RBI under CRR.
– It is a percentage of the bank’s total deposits (NDTL).

Statutory Liquidity Ratio (SLR) is another reserve requirement, which mandates banks to maintain a certain percentage of their NDTL in the form of liquid assets such as cash, gold, and unencumbered government securities.

More similar MCQ questions for Exam preparation:-