Gujarat BoardEnglish MediumSTD 12 CommerceEconomicsBANKING AND MONETARY POLICY2 Marks
Question
What is Cash Reserve Ratio $(CRR)?$
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Answer
Under the $RBI$ Act, $1934$ all commercial banks have to keep certain cash reserves with the $RBI.$
Since $1962, CRR$ is vary between $3\%$ and $15\%$ of the total deposits of individual banks. During inflation $RBI$ increases $CRR$ so commercial banks have lesser deposit money to create credit.
CRR is reduced during the times of deflation or depression.
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