BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Less liquidity in the market
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More liquidity in the market
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No change in the liquidity in the market
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Mobilization of more deposits by commercial-banks
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Detailed explanation-1: -Purchasing power of individual will increase, in result demand for the goods will increase, supply will meet the demand. Reducing Bank rate is one of the Quantitative measure in Monetary policy.
Detailed explanation-2: -When SLR is reduced, banks have more money to lend which may lead to a decrease in lending rates. By changing the level of SLR, the Reserve Bank of India can increase r decrease bank credit expansion.
Detailed explanation-3: -The correct answer for this question is (C). When the Reserve Bank of India reduces the Statutory Liquidity Ratio by 50 basis points, scheduled commercial banks may cut their lending rates.
Detailed explanation-4: -Description: In the event of inflation, central banks increase repo rate as this acts as a disincentive for banks to borrow from the central bank. This ultimately reduces the money supply in the economy and thus helps in arresting inflation.
Detailed explanation-5: -If RBI increases the repo rate, the cost of borrowing for retail and other loans by the banks, also raises. Subsequently, the banks will pass on the increasing cost to the borrowers by hiking the interest rates on multiple loans. What is the current repo rate ?