A decrease in Cash Reserve Ratio CRR can lead to which among the following increase in cash availabi...........

Economic Affairs Money Supply and Monetary Policy

A decrease in Cash Reserve Ratio (CRR) can lead to which among the following?

Select the incorrect code.

1&2 only

2&3 only

1&3 only

All of the above

Under CRR a certain percentage of the total bank deposits has to be kept in the current account with RBI which means banks do not have access to that much amount for any economic activity or commercial activity.
Banks can’t lend the money to corporates or individual borrowers, banks can’t use that money for investment purposes.
Any decrease in CRR will therefore increase cash availability with the banks. Repo rate and SLR would not be affected by changes in CRR. They are separate mechanisms, the rate of which is decided by RBI. Hence only statement 1st is correct.