Practicing Success
Percentage of deposits which commercial bank must keep as cash reserve with Central Bank is : |
Repo Rate Cash Reserve Ratio Bank Rate Statutory Liquidity Rate |
Cash Reserve Ratio |
The correct answer is option (2) : Cash Reserve Ratio Cash Reserve Ratio (CRR) is a monetary policy tool used by central banks to control liquidity and inflation. It specifies the percentage of net demand and time liabilities (deposits) that banks must maintain as cash reserves with the central bank. This reserve requirement helps in regulating the money supply and credit creation in the economy. Repo rate : The rate at which the central bank lends money to commercial banks for the short term. Bank Rate: The rate at which the central bank lends money to commercial banks for the long term. Statutory Liquidity Rate (SLR): The percentage of a bank's total deposit that it needs to maintain in the form of liquid assets like cash, gold, or government-approved securities. |