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Apart from the CRR, banks must look after liquid assets when it comes to silver, dollars and you will acknowledged securities. High exchangeability ratio forces commercial banking companies to maintain a much bigger ratio of their info inside h2o function which means reduces their ability to deliver finance and you may improves, therefore it’s an anti-inflationary impression. A high exchangeability proportion diverts the financial institution funds from financing and you may advances in order to investment inside the authorities and accepted bonds. To help you curb rising prices, the fresh RBI grows repo rates to produce borrowing from the bank charges for banking institutions.

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