Answer to Question #77318 in Management for supriya

Question

Cash Reserve Ratio plays an Important role in the economy and RBI plays an important role in monitoring inflation through CRR .Discuss how RBI perform this critical function using CRR as an instrument.

Answer 1

RBI controls the money supply economy that is the amount provided by the organization or the industry. It also has a task of managing the credit cost meaning as well as the economic price pay for the money borrowed. The two factors may bring about growth or inflation in an economy. Banks may invest or lend more If for instance RBI cuts CRR in the next financial policy and hence a lot of money may be released and thus spur fiscal growth.