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#Minimum Reserve System
#Advantage of Minimum Reserve System
#Commerce index


: Minimum Reserve System :


➡️For the issue of currencies, the RBI follows Minimum Reserve System at present.

➡️The Minimum Reserve System #MRS is followed from 1956 onwards.

➡️Under the Minimum Reserve System, the RBI has to keep a minimum
reserve of Rs.200 crore comprising of gold coin and gold bullion and foreign currencies.

➡️Out of the total Rs 200 crores, Rs 115 crore should be in the
form of gold coins or gold bullion.

➡️The purpose of shifting to Minimum Reserve System was to
expand money supply to meet the needs of increasing transactions in the
economy.

🎉Advantages of minimum reserve system : 🎉

👉This method is elastic in nature.
👉Increase in issue of notes does not require increase in the minimum reserves.
👉This method is reliable during financial crisis and emergencies like war, earth quake and floods.