With regard to the Currency Deposit Ratio (CDR), all of the following is true, EXCEPT:

Explanation

The correct answer is During festive season the CDR typically declines. Key Points Currency Deposit Ratio:- CDR is the ratio of currency with the public to demand deposits of banks. It reflects people's preference for liquidity, i.e., how much currency people prefer to hold in comparison to keeping it in the bank. CDR is a behavioral parameter as it depends on people's spending habits and their confidence in the banking system. It may also depend on the interest rates offered by banks on deposits and the inflation rate in the economy. The seasonal pattern of expenditure may affect CDR as people tend to withdraw more currency during festive seasons for spending purposes.