48th to 52nd B.P.S.C. (Pre) 2008

If the Cash Reserve Ratio is lowered by the RBI, its impact on credit creation will be :

aIncrease✓ Correct
bDecrease
cNo impact
dNone of the above

Explanation

If the Reserve Bank of India reduces the Cash Reserve Ratio (CRR), the amount of credit creation by commercial banks increases.

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