BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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ratio of money held by the public in currency to that of money held in bank deposits
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ratio of money held by public in bank deposits to that of money held by public in currency
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ratio of money held in demand drafts to that of money held in treasury bonds
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none of the above
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Detailed explanation-1: -Currency Deposit Ratio is the ratio of money held by public in currency to that they hold in bank deposits. The currency deposit ratio shows the amount of currency that people hold as a proportion of aggregate deposits. It reflects people’s preference for liquidity.
Detailed explanation-2: -The Currency Deposit Ratio: The currency deposit ratio (cdr) is the ratio of money held by the public in currency to that they hold in bank deposits. cdr = CU/DD. If a person gets Re 1 she will put Rs 1/(1 + cdr) in her bank account and keep Rs cdr/(1 + cdr) in cash. It reflects people’s preference for liquidity.
Detailed explanation-3: -Definition: Cash Reserve Ratio (CRR) is a specified minimum fraction of the total deposits of customers, which commercial banks have to hold as reserves either in cash or as deposits with the central bank. CRR is set according to the guidelines of the central bank of a country.
Detailed explanation-4: -Credit-Deposit Ratio = Total Advances * 100. Total Deposits. I also found out that the all-India credit-deposit ratio of private banks is 91.4 percent whereas, the CD ratio of public sector banks is 69.0 percent.
Detailed explanation-5: -CRR rate is the minimum percentage of cash deposits (as specified by RBI) that must be maintained by every commercial bank as per the requirement of the Central Bank i.e. RBI. Cash Reserve Ratio Rate is computed as a percentage of the net demand and time liabilities of each bank.