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  1. Home
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International Relations·2014·Medium

In the context of Indian economy, which of the following is/are the purpose/purposes of 'Statutory Reserve Requirements'? 1. To enable the Central Bank to control the amount of advances the banks can create 2. To make the people's deposit with the banks safe and liquid 3. To prevent the commercial banks from making excessive profits 4. To force the banks to have sufficient vault cash to meet their day-to-day requirements Select the correct answer using the code given below:

In the context of Indian economy, which of the following is/are the purpose/purposes of 'Statutory Reserve Requirements'?
1. To enable the Central Bank to control the amount of advances the banks can create
2. To make the people's deposit with the banks safe and liquid
3. To prevent the commercial banks from making excessive profits
4. To force the banks to have sufficient vault cash to meet their day-to-day requirements
Select the correct answer using the code given below:

Options

  1. a.

    1 only

  2. b.

    1 and 2 only

    Correct answer
  3. c.

    2 and 3 only

  4. d.

    1, 2, 3 and 4

Explanation

Statutory Liquidity Ratio (SLR) are maintained by the banks in 'non-cash' form which are used by then to raise cash against it (from the money market) in times of cash mismatch (and 'vault cash' means liquid cash). Profit management is not the aim behind SLR.

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