BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Lender Coverage Ratio
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Liquidity Cash Ratio
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Liquidity Common Ratio
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Liquidity Coverage Ratio
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Detailed explanation-1: -LCR = (Liquid Assets / Total Cash Outflows) X 100 The first step in this process is to determine the net cash outflows for a thirty-day time horizon (the number of days in one month). These are calculated by multiplying each day’s inflows and outflows together.
Detailed explanation-2: -When the RBI decides to increase the Cash Reserve Ratio, the amount of money that is available with the banks reduces. This is the RBI’s way of controlling the excess flow of money in the economy.
Detailed explanation-3: -Repo Rate (RR) is the rate at which the Reserve Bank of India (RBI) lends money to commercial banks or financial institutions in India against government securities. The current Repo Rate 2022 is at 4.40%. Changes in Repo Rate affect the flow of money in the market.
Detailed explanation-4: -Liquidity Cover Ratio (LCR) requires a bank to maintain a certain stock of High-Quality Liquid Assets (HQLA) to help it weather a stressful period, like the financial crisis of 2008. It helps the bank stay afloat during a financial crisis, at least until the government or the central bank can come to its rescue.