Discussion
RBI kept repo rate unchanged at 6.25 percent. What did it abolish?
Answer: A
Correct answer: Temporary 100 percent CRR
The RBI withdrew the temporary incremental cash reserve ratio of 100 per cent that it had imposed on the deposits accumulated between mid-September and mid-November 2016.
The measure had been an emergency response to demonetisation, which flooded banks with cash they could not lend fast enough; requiring the whole of that increment to be held as reserves absorbed the excess liquidity at a stroke. Once market stabilisation scheme securities were available to absorb it more conventionally, the incremental requirement could be removed.
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