As we know that Cash Reserve Ratio (CRR) is the amount of funds that the banks have to keep with the Reserve Bank of India. Consider the following consequences , if Reserve Bank of India decides to increase the CRR substantially in its monetary policy: 

  1. The banks will have to keep more money with RBI and this dries up the liquidity. 
  2. The Banks will have to increase the Interest rates on their Home Loan products 
  3. The banks will be able to earn more money due to increased interest rates. 

Which among the above statements hold true?

[A] all 1,2 3
[B] 1 & 2 only
[C] 2 & 3 only
[D] 1 & 3 only

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