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Q63: Identify the INCORRECT statement regarding the daily maintenance of CRR:

A
Banks are required to maintain a minimum of 90% of the required CRR on all days of the reporting fortnight.
B
If the CRR balance drops below the minimum daily requirement, penal interest is charged for that specific day.
C
Banks can maintain 100% of their CRR requirement in the form of "Cash on Hand" (vault cash).
D
The 90% rule allows banks flexibility to manage intra-fortnight cash flows.
✅ Correct Answer: C
The correct answer is C. This is the incorrect statement.
CRR must be maintained exclusively as a balance with the Reserve Bank of India.
Cash kept in the bank's own vaults ("Cash on Hand") does not count towards CRR compliance under any circumstances, although it is an eligible asset for maintaining the Statutory Liquidity Ratio (SLR). Statements A, B, and D accurately describe the mechanics and rationale of the 90% minimum daily maintenance rule for CRR.
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