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Daily Current Affairs Answer & Explanation : 07 July 2020
Cash Reserve Ratioabbreviated as CRR is the percentage of total deposits, which a commercial bank has to keep as reserves in the form of cash with the Central Bank of India. The banks are not allowed to use that money, kept with RBI, for economic and commercial purposes.
It is a tool used by the Central Bank of India to regulate the liquidity in the economy and control the flow of money in the country.
Therefore, if the RBI wants to increase the money supply in the economy, it will reduce the rate of CRR while, if RBI seeks to decrease the money supply in the market then it will increase the rate of CRR.
Statutory Liquidity Ratio abbreviated as an SLR, is a percentage of Net Time and Demand Liabilities kept by the bank in the form of liquid assets.
It is used to maintain the stability of banks through limiting the credit facility offered to its customers. The banks hold more than the required SLR and the purpose of maintaining the SLR is to hold a certain amount of money in the form of liquid assets, so as to fulfill the demand of the depositors when arises.
Here, Time Liabilitiesmean the amount of money which is made payable to the customer after a period of time while the demand liabilities means the amount of money which is made payable to the customer at the time when it is demanded.
Demand liabilities of a bank include:
Demand liabilities portion of savings bank deposits
Margins held against letters of credit/guarantees
Answer : a
The quantitative measures of credit control are :
Bank Rate Policy: The bank rate is the Official interest rate at which RBI rediscounts the approved bills held by commercial banks. For controlling the credit, inflation and money supply, RBI will increase the Bank Rate. Current Bank Rate is 6%.
Open Market Operations: OMO The Open market Operations refer to direct sales and purchase of securities and bills in the open market by Reserve bank of India. The aim is to control volume of credit.
Cash Reserve Ratio: Cash reserve ratio refers to that portion of total deposits in commercial Bank which it has to keep with RBI as cash reserves. The current Cash reserve Ratio is 6%.
Statutory Liquidity Ratio: It refers to that portion of deposits with the banks which it has to keep with itself as liquid assets (Gold, approved govt. securities etc). The current SLR is 25%.
If RBI wishes to control credit and discourage credit it would increase CRR & SLR.
The Environment Impact Assessmentrules are notified under the Environment (Protection) Act, 1986 for imposing certain restrictions and prohibition on the undertaking some projects or expansion or modernization of such existing projects entailing capacity addition in any part of India.
Projects operating in violation of the Environment Act will now be able to apply for clearance.
Minister of State for Human Resource Development Sanjay Dhotre inaugurated the India Pavilion at International Book Fair in Guadaljara, Mexico.
This fair is the biggest book fair in the Spanish-speaking world. India is the ‘Guest of Honour Country’ in this book fair and it becomes the first Asian country to participate as ‘Guest of Honour’ in the Fair.