GK
BANKING AWARENESS AND SEBI
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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What will be the impact if Reserve Bank of India reduces the Bank Rate by 1 %?
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Less liquidity in the market
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More liquidity in the market
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No change in the market liquidity
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Mobilisation of more deposits by commercial banks
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Explanation:
Detailed explanation-1: -The correct answer is More liquidity in the market.
Detailed explanation-2: -The decrease in bank rate induces people to borrow more from the bank and this will have a positive effect on the money supply. Q. How do changes in Bank Rate affect money supply in an economy? Explain.
Detailed explanation-3: -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.
There is 1 question to complete.