What will happen if the RBI eliminates the cash reserve ratio?
**ELIMINATION OF CASH RESERVE RATIO** Cash Reserve ratio means the funds which other banks have to keep with RBI The intention for this is to help the banks when they have to meet the urgent demand from bank customers The extra money in the economy is taken out through this method so if this is eliminated banks will have lot of money to lend to people and this will disturb economy in various ways .. If CRR is removed the country will suffer during the time of inflation because there is no maintainence of cash flow in the market Thanks :)
if RBi eliminates the CRR then bank will not have to retain a amount of money with RBi. then in that case to increase the business bank will try to lend more and more and money and because of that it will impact on economy of the country as more and more money has came in the market and ultimately the value of Rupee will go down .