Economics · Monetary Policy
Analyze the following statements regarding the tools of Monetary Policy in India: Statement I: The Cash Reserve Ratio (CRR) is the percentage of a bank's NDTL that it must maintain with the RBI in the form of cash, on which the RBI pays a fixed interest rate. Statement II: The Statutory Liquidity Ratio (SLR) can be maintained in the form of cash, gold, or unencumbered government securities. Statement III: An increase in the Repo Rate effectively increases the cost of borrowing for commercial banks from the RBI, thereby helping to reduce the money supply in the economy. Statement IV: 'Moral Suasion' is a quantitative tool of the RBI used to control the total volume of credit in the banking system. Which statements are accurate?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Only Statement II and III are correct✓
- 2Statement I, II, and III are correct
- 3Only Statement III and IV are correct
- 4All statements are correct
Correct answer
Only Statement II and III are correct
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