The reserves of cash kept by a bank to meet its payment requirements are called "Cash Reserve Ratio" (CRR).

Here are the steps to understand this:

1. Banks are financial institutions that deal with large amounts of money on a daily basis. They have various liabilities and obligations, such as providing cash to customers who want to withdraw money from their accounts.

2. To ensure that they can meet these obligations, banks are required to keep a certain amount of their deposits in the form of cash. This is known as the Cash Reserve Ratio (CRR).

3. The CRR is a crucial monetary policy tool used by the central bank to control liquidity in the banking system. By adjusting the CRR, the central bank can control the amount of cash available to banks for lending.

4. If the central bank increases the CRR, banks have to keep more cash in reserve, which reduces their lending capacity. Conversely, if the central bank decreases the CRR, banks can lend more money.

5. Therefore, the Cash Reserve Ratio (CRR) is the percentage of total deposits that banks are required to keep with themselves in the form of cash reserves.

Question

The reserves of cash kept by a bank to meet its payment requirements are called "Cash Reserve Ratio" (CRR).

Here are the steps to understand this:

1. Banks are financial institutions that deal with large amounts of money on a daily basis. They have various liabilities and obligations, such as providing cash to customers who want to withdraw money from their accounts.

2. To ensure that they can meet these obligations, banks are required to keep a certain amount of their deposits in the form of cash. This is known as the Cash Reserve Ratio (CRR).

3. The CRR is a crucial monetary policy tool used by the central bank to control liquidity in the banking system. By adjusting the CRR, the central bank can control the amount of cash available to banks for lending.

4. If the central bank increases the CRR, banks have to keep more cash in reserve, which reduces their lending capacity. Conversely, if the central bank decreases the CRR, banks can lend more money.

5. Therefore, the Cash Reserve Ratio (CRR) is the percentage of total deposits that banks are required to keep with themselves in the form of cash reserves.

Knowee AI · Accepted Answer

The reserves of cash kept by a bank to meet its payment requirements are called "Cash Reserve Ratio" (CRR).

Here are the steps to understand this:

1. Banks are financial institutions that deal with large amounts of money on a daily basis. They have various liabilities and obligations, such as providing cash to customers who want to withdraw money from their accounts.

2. To ensure that they can meet these obligations, banks are required to keep a certain amount of their deposits in the form of cash. This is known as the Cash Reserve Ratio (CRR).

3. The CRR is a crucial monetary policy tool used by the central bank to control liquidity in the banking system. By adjusting the CRR, the central bank can control the amount of cash available to banks for lending.

4. If the central bank increases the CRR, banks have to keep more cash in reserve, which reduces their lending capacity. Conversely, if the central bank decreases the CRR, banks can lend more money.

5. Therefore, the Cash Reserve Ratio (CRR) is the percentage of total deposits that banks are required to keep with themselves in the form of cash reserves.

Reserves of cash kept with itself by a bank to meet its payment requirements is called

Question

Reserves of cash kept with itself by a bank to meet its payment requirements is called

Solution

Similar Questions

Upgrade your grade with Knowee