In the context of the monetary policy framework in India, consider the following statements: Assertion (A): The Reserve Bank of India (RBI) generally utilizes the Cash Reserve Ratio (CRR) more sparingly as a tool for credit control compared to Open Market Operations (OMOs) or adjustments to the Repo rate. Reason (R): Any modification in the CRR levels directly impacts the commercial profitability of banks since the mandatory cash reserves held with the RBI do not earn any interest income.

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General Knowledge · General Awareness

Verified Solution4 OptionsUpdated: October 2026👁️1 View

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Both (A) and (R) are true, and (R) is the correct explanation of (A).

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Answer 1

Assertion (A) is false, but Reason (R) is true.

Answer 2

Assertion (A) is true, but Reason (R) is false.

Answer 3

Both (A) and (R) are true, but (R) is not the correct explanation of (A).

Answer 4

Both (A) and (R) are true, and (R) is the correct explanation of (A).

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