Question
Consider the following statements regarding the Cash
Reserve Ratio (CRR): 1. Banks earn interest on the CRR balances maintained with the RBI. 2. An increase in CRR helps in sucking out liquidity from the banking system. 3. CRR is applicable only to Public Sector Banks. Which of the statements above is/are correct?ΒSolution
Banks do not earn any interest on CRR. It is applicable to all Scheduled Commercial Banks (Public, Private, Foreign, RRBs, and Cooperatives).
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