Economics · Banking and Monetary Policy

Which of the following statements is NOT correct regarding monetary policy and banking instruments in India?

Verified Solution4 OptionsUpdated: October 2026👁️1 View

1The RBI cannot influence the money supply by changing the repo rate at which it lends money to commercial banks.✓
2The money multiplier is inversely related to the reserve ratio.
3Banks are required to maintain a certain proportion of their net demand and time liabilities in liquid assets, known as Statutory Liquidity Ratio (SLR).
4Cash Reserve Ratio (CRR) is the percentage of deposits that a bank must keep as cash reserves with the RBI.

Correct answer

The RBI cannot influence the money supply by changing the repo rate at which it lends money to commercial banks.

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