“To boost the falling demand in the economy, the Reserve Bank of India recently reduced Repo rate.” Elaborate the rationale behind the steps taken by the Central Bank.
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Explanation:
: Cash Reserve Ratio ensures that a part of the bank's deposit is with the Central Bank and is hence, secure. Another objective of CRR is to keep inflation under control. During high inflation in the economy, RBI raises the CRR to lower the bank's loanable funds.
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Answer:
Repo rate is the rate at which Reserve Bank of India lends funds to . commercial bank..
Reduction in repo rate may encourage banks to reduce lending rates or interest rates.
This will help people and encourage them to take more loans and increase the money circulation.
This will create a good money flow in the economy.
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