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    Question

    Which of the following was the main objective of the

    Reserve Bank of India to introduce ‘Incremental cash reserve ratio (I-CRR)’?
    A To enhance the monitoring of governance of banks placed under Prompt Corrective Action (PCA) framework Correct Answer Incorrect Answer
    B To absorb excess liquidity from the banking system. Correct Answer Incorrect Answer
    C To encourage savings. Correct Answer Incorrect Answer
    D None of the above Correct Answer Incorrect Answer

    Solution

    The Reserve Bank of India has decided to discontinue the incremental Cash Reserve Ratio (I-CRR) in a phased manner.  The I-CRR was introduced on August 10, 2023, by the RBI to absorb the surplus liquidity generated by various factors, including the return of Rs 2,000 notes to the banking system.

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