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:
- The banks will have to keep more money with RBI and this dries up the liquidity.
- The Banks will have to increase the Interest rates on their Home Loan products
- The banks will be able to earn more money due to increased interest rates.
Which among the above statements hold true?