ECONOMICS
MONEY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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True
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False
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Either A or B
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None of the above
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Detailed explanation-1: -Ideally, banks cannot lend, for example, more than Rs 70 for every Rs 100 they mobilised as deposits, because they need to set aside Rs 30 in the form of cash reserve ratio (CRR) and statutory liquidity ratio (SLR).
Detailed explanation-2: -Payments bank comes under a differentiated bank licence since it cannot offer all the services that a commercial bank offers. In particular, a payments bank cannot lend. It can take deposits upto ₹1 lakh per account and it can issue debit cards but not credit cards.
Detailed explanation-3: -The Primary Way That Banks Make Their Money. The main way that banks make money is from their customers who deposit with them. They then use that money to then lend to other customers.
Detailed explanation-4: -Required reserves are a percentage of checkable deposits (checking account deposits) set by the central bank’s (the Federal Reserve in the US) reserve requirement. Excess reserves is the amount of total reserves the bank can loan out.