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प्रश्न
State the impact of an increase in Cash Reserve Ratio on loanable funds.
What is the impact of an increase in Cash Reserve Ratio on loanable funds?
संक्षेप में उत्तर
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उत्तर
- An increase in the Cash Reserve Ratio (CRR) requires commercial banks to maintain a higher portion of their deposits as reserves with the Reserve Bank of India.
- This reduces the amount of money available to banks for lending, resulting in a fall in total loanable funds.
- As a result, bank's ability to lend to consumers and businesses decreases, thereby slowing economic activity.
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