📝 Multiple Choice Question
Economics
What is the Cash Reserve Ratio (CRR) in the context of Indian banking?
A
It's the interest rate at which banks borrow from the central bank
B
It's the percentage of deposits that banks must keep in liquid form in the short term
C
It's the ratio of a bank's capital to its total assets
D
It's the ratio of government bonds to total assets held by a bank
Explanation
The Cash Reserve Ratio (CRR) is a highly critical monetary policy tool powerfully used by the Reserve Bank of India, mathematically defined as the minimum percentage of a commercial bank's total deposits that strictly must be held as liquid cash reserves.
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