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The document discusses the cash reserve ratio (CRR) mechanism used by the Reserve Bank of India (RBI) to control credit. It explains that commercial banks must maintain a percentage of deposits in reserves with the RBI, currently 3%. The RBI can vary this ratio to control credit creation - increasing it during inflation to reduce bank lending, or decreasing it during economic downturns to increase lending. The CRR allows RBI to influence the amount of funds banks have available for lending and thereby regul

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