INTERVIEW QUESTIONS DATA WAREHOUSING BUSINESS INTELLIGENCE DETAILS

Question: Is the increase in CRR rate a good sign for Indan economy and why?

Answer: No. Hike is CRR (cash reserve ratio) of commercial banks means that, they have to keep more money as reserves. This reduces the amount of money available for credit (reduced liquidity) and naturally interest rates will rise. A rising interest rate means loans are more costly and will affect expansion plans by corporates resulting in lower overall economic growth.

But it is important to note that hike is CRR is generally done to bring down inflation!

No. Hike is CRR (cash reserve ratio) of commercial banks means that, they have to keep more money as reserves. This reduces the amount of money available for credit (reduced liquidity) and naturally interest rates will rise. A rising interest rate means loans are more costly and will affect expansion plans by corporates resulting in lower overall economic growth.

But it is important to note that hike is CRR is generally done to bring down inflation! Source: CoolInterview.com

No.CRR Stadnds for Cash Reserve Ratio.The Reserve bank of India keeps with itself a percentage of the amount from each bank in proportion to the sum of deposits of that bank and this percentage is fixed through CRR. Which is increased by the Reserve bank of India to control the inflation and decreased to increase the liquidity of cash in the hands of banks. whenever CRR is increased ,the interest rates goes up for loans.The interest rates for deposit also goes up, because banks need more money to keep available for loans.And when CRR is decreased the interest rates for Loans and deposits goes down because now there is more cash available in liquid form with the banks. Source: CoolInterview.com

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