UPSC General Studies Solved Paper - General Studies-2014

  • question_answer
    In the context of Indian economy, which of the following is/are the purpose/purposes of 'Statutory Reserve
    1. To enable the Central Bank to control the amount of advances the banks can create.
    2. To make the people's deposits with banks safe and liquid.
    3. To prevent the commercial banks from making excessive profits.
    4. To force the banks to have sufficient vault cash to meet their day-to-day requirements.
    Select the correct answer using the codes given below.

    A)  Only 1 

    B)  1 and 2    

    C)  2 and 3           

    D)  All of these

    Correct Answer: A

    Solution :

    Exp. [a] The RBI makes these reserve requirements - CRR and St-R. Cash Reserve Ratio (CRR) refers to the amount proportion that the banks are required to keep with the RBI in money form, while Statutory Liquidity Ratio (SLR) refers to the proportion of the Net Demand and Time Liabilities (NDTL) that the bank are required to keep in liquid form like government securities and other bonds.

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