BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Banks are required to keep the amount in approved government securities of the appropriate value
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The amount to be maintained in cash and securities with RBI
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The required amount is to be maintained in gold with RBI
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All of the above
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Detailed explanation-1: -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. Ensuring the solvency of commercial banks.
Detailed explanation-2: -Detailed Solution. The correct answer is Scheduled commercial banks will cut their lending rates. Should the RBI reduce the statutory liquidity ratio by 50 basis points, then Scheduled commercial banks will cut their lending rates.
Detailed explanation-3: -The ratio of these liquid assets to the demand and time liabilities is called the Statutory Liquidity Ratio (SLR). The Reserve Bank of India (RBI) has the authority to increase this ratio by up to 40%. An increase in the ratio constricts the ability of the bank to inject money into the economy.
Detailed explanation-4: -All Scheduled Commercial Banks are at present required to maintain with Reserve Bank of India a Cash Reserve Ratio (CRR) of 5.00 per cent of the Net Demand and Time Liabilities (NDTL) (excluding liabilities subject to zero CRR prescriptions) under Section 42(1) of the Reserve Bank of India Act, 1934.