General Knowledge : Banking Awareness : Discussion


Which are the following rates are decided by the RBI is called "Policy Rate"?

A. Cash reserve ratio.
B. Lending rate.
C. Bank rate.
D. Deposite rate.

Answer: Option A

Explanation:

Cash reserve ratio (CRR) is the funds that all the scheduled bank have to maintain with RBI, the supreme banking authority of India. By increasing the CRR RBI drain out excessive funds from the scheduled banks.

Example: Suppose the CRR is 5% . A person/customer open a Savings bank account with Rs. 10,000 in Punjab National Bank. So now Punjab National Bank has to park Rs. 500 to Reserve Bank of India (RBI) as per the CRR rate.

5% of 10,000 = 500 (CRR= 5%).


Comments:

Auyshi Pathak said: (Sun, Nov 3, 2013 07:15:58 AM)
What is lending rate?


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