Consider the following statements 1 Cash Reserve Ratio CRR is the amount of funds th...........

2. Banks need to retain the CRR with themselves.

3. CRR is based on total net Demand and Time Liabilities (DTL) to ensure the liquidity and solvency of Banks

Which of the statements given above is/are incorrect?

2 and 3

Only 2

1 and 3

Only 2

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Explanation:

Cash Reserve Ratio refers to the fraction of the total Net Demand and Time Liabilities (NDTL) of a Scheduled Commercial Bank held in India, that it has to maintain as cash deposit with the Reserve Bank of India (RBI). The requirement applies uniformly to all banks in the country irrespective of an individual bank’s financial situation or size.