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UPSC 2010: When the Reserve Bank of India announces an increase of the Cash Reserve Ratio, what does it mean?
(a)The commercial banks will have less money to lend
(b)The Reserve Bank of India will have less money to lend
(c)The Union Government will have less money to lend
(d)The commercial banks will have more money to lend
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Not attemptedCorrect Answer: (a) The commercial banks will have less money to lend
When the RBI raises the CRR, banks must keep a larger fraction of their deposits as cash with the RBI. This cuts the amount of deposits they can deploy, so commercial banks have less money available for lending to customers. ([economictimes.indiatimes.com](https://economictimes.indiatimes.com/wealth/save/crr-vs-slr-why-rbi-instructs-banks-to-maintain-them-and-how-they-benefit-customers/articleshow/125936804.cms?utm_source=openai))
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What is the correct answer to this UPSC 2010 Indian Economy question?▼
The correct answer is option (a): The commercial banks will have less money to lend. Watch the detailed video explanation in our Sherlocking Prelims course on UnlockIAS.
Which year was this Monetary Policy & Money Supply question asked in UPSC Prelims?▼
This question was asked in UPSC CSE Prelims 2010, GS Paper 1, as Question 81. It falls under Indian Economy > Monetary Policy & Money Supply.
What is the difficulty level of this UPSC question?▼
This question is rated "easy". It tests basic recall and most well-prepared aspirants should answer it correctly.
How many UPSC Prelims questions have been asked from Monetary Policy & Money Supply?▼
UPSC has asked 27 questions from Monetary Policy & Money Supply (under Indian Economy) across multiple years. Visit the topic page to see the full list and year-wise trends.