Q33 (CGS/2026) Economy › Money, Banking & Inflation

A bank generated savings credit of ₹1,600 crore in the first round from a savings deposit of ₹2,000 crore. What is the Cash Reserve Ratio fixed by the Central Bank?

Result

Your answer: — · Correct: C

Explanation

The Cash Reserve Ratio (CRR) is the portion of total deposits that commercial banks are required to maintain as liquid cash with the Central Bank. The credit created in the first round represents the amount a bank lends out after setting aside the required reserve.

Based on the data provided:
Initial Savings Deposit = ₹2,000 crore
Credit Generated (Lent out) = ₹1,600 crore
Amount kept as Reserve = Initial Deposit - Credit Generated = 2,000 - 1,600 = ₹400 crore.

The CRR is calculated as:
CRR = (Reserve / Initial Deposit) × 100
CRR = (400 / 2,000) × 100 = 20%.

Thus, the Central Bank has fixed the Cash Reserve Ratio at 20%.

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