Module: | Priority Sector, Consumer Protection & Digital Lending
Q75: If a bank fails to maintain the required Cash Reserve Ratio (CRR) on any day, it is liable to pay penal interest to the RBI. What is the penal rate for the first day/instance of such default?
✅ Correct Answer: B
The correct answer is B. The RBI enforces strict penal provisions for the shortfall in maintaining the daily minimum Cash Reserve Ratio (CRR) requirement.
According to the regulatory framework, for the first day or first instance of a CRR default, the penal interest rate is strictly calculated as the prevailing Bank Rate plus 3% per annum on the amount of the shortfall.
Option A and C are incorrect because the penalty is strictly pegged to the Bank Rate, not the Repo Rate or MSF Rate.
Option D (Bank Rate + 5%) represents the escalated penalty rate applied on subsequent, consecutive days of continued default, not the first instance.
According to the regulatory framework, for the first day or first instance of a CRR default, the penal interest rate is strictly calculated as the prevailing Bank Rate plus 3% per annum on the amount of the shortfall.
Option A and C are incorrect because the penalty is strictly pegged to the Bank Rate, not the Repo Rate or MSF Rate.
Option D (Bank Rate + 5%) represents the escalated penalty rate applied on subsequent, consecutive days of continued default, not the first instance.