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प्रश्न
State the impact of an increase in Cash Reserve Ratio on loanable funds.
What is the impact of an increase in Cash Reserve Ratio on loanable funds?
उत्तर
- An increase in the Cash Reserve Ratio (CRR) requires commercial banks to maintain a higher portion of their deposits as reserves with the Reserve Bank of India.
- This reduces the amount of money available to banks for lending, resulting in a fall in total loanable funds.
- As a result, bank's ability to lend to consumers and businesses decreases, thereby slowing economic activity.
संबंधित प्रश्न
The rate of which commercial banks borrow from the Central Bank is the:
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Assertion (A): Bank rate is a quantitative instrument of monetary policy.
Reason (R): During inflation, RBI reduces the bank rate.
Define the following term:
Margin Requirements.
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Publicity
Briefly explain the following credit control methods adopted by the Central Bank.
Moral persuasion
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The Central Bank sells government approved securities to the public.
Identify the following Credit Control measures undertaken by the Central Bank during inflation.
The Central Bank increases the rate at which it lends to the Commercial Bank.
What do you mean by credit control?
Describe two quantitative credit control measures of the Central Bank.
