BANKING GENERAL KNOWLEDGE
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Detailed explanation-1: -Accordingly, banks will be able to dip into the Statutory Liquidity Ratio (SLR) up to two percent of NDTL instead of three percent for overnight borrowing under the MSF with effect from January 1, 2022.
Detailed explanation-2: -Under MSF, banks can borrow funds up to one per cent of their net demand and time liabilities (NDTL).
Detailed explanation-3: -Marginal Standing Facility (MSF) refers to the rate at which banks can borrow overnight funds from the RBI. The maximum credit a bank can avail through MSF is 3% of its total deposits (NDTL).
Detailed explanation-4: -A legal lending limit is the most a bank or thrift can lend to a single borrower. The legal limit for national banks is 15% of the bank’s capital. If the loan is secured by readily marketable securities, the limit is raised by 10%, bringing the total to 25%.
Detailed explanation-5: -(NDTL). NDTL, in banking parlance, is the aggregate of savings account, current account, and fixed deposit balances held by a bank. So banks have to keep 18% (or whatever the statutory liquidity ratio rate is) of their aggregate deposits with the RBI in the form of liquid securities.