Money Supply: GK, General Studies and Current Affairs

What is a Contractionary Policy?

Contractionary Policy refers to the monetary policy which aims to slow down the economy by introducing a reduction in money supply for lesser money and investment. There are many economic tools used by the Central Bank of every nation like CRR, SLR, Repo, Reverse Repo, Interest Rate etc. to keep a check on the volume ..

What is the meaning of Cash Reserve Ratio?

Cash Reserve Ratio is a specific amount of funds which the commercial banks have to keep with the Reserve Bank of India to ensure liquidity in the system. The funds are a part of the Net Demand and Time Liabilities (NDTL). A reduction in CRR leads to more liquidity in the system as the banks ..

CRR should be reduced: C Rangarajan

The Prime Minister’s Economic Advisory Council Chairman, C Rangarajan, has opined to reduce the use of CRR and suggested that it should be used only in extraordinary circumstances. As per him, the need for using it reduces with the option of Open Market Operations (OMOs) already in place. Cash Reserve Ratio which is abbreviated as ..

A look into recent RBI decisions

The Reserve Bank of India’s third quarter recapitulation of monetary policy was devoid of major surprises. The only change in monetary policy instruments was a cut in the Cash Reserve Ratio (CRR) by 0.50% point to 5.5%. This decision will in turn resulted in- Release of Rs.32,000 Crore of funds squeezed from banks. The key ..