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Ans – (b) Explanation:- Time Deposits:- It refers to those deposits, in which the amount is deposited with the bank for a fixed period of time. 1. Such deposits do not enjoy a chequeable facility. These deposits carry a high…
Ans – (b) Explanation:- RBI does not deal with the public. Thus It is not the banker to the public. It only deals with financial institutions and government.
Ans – (c) Explanation:- The legal Reserve Requirement is also known as Variable Reserve Ratio. It has two components: 1. Cash reserve ratio 2. statutory Liquidity Ratio This ratio is controlled by the central bank and can be changed as…
Ans – (b) Explanation:- RBI is the central bank of India. It is the apex body of the financial institution. It controls and regulates other financial institutions such as commercial banks. It is also the bank of the government. It…
Ans – (b) Explanation:- Total Deposits = Initial Deposits × 1/LRR Total Deposits = 3,000 × 1/25% Total Deposits = 3,000 × 4 Total Deposits = ₹ 12,000 Crores
Ans – (b) Explanation:- One of the Monetary policies practiced by the RBI is the Open Market operations. RBI has the right to sell and purchase of government securities to the public. By practicing it, RBI can control the money…
Ans – (a) Explanation:- The other name of Money Multiplier are: (i) Credit Multiplier (ii) Deposit Multiplier Money multiplier is the formula that calculates, how much money money a commercial bank can create. In this whole process, Money is created…
The other name of Legal Reserve Ratio are: 1. Reserve Deposit Ratio 2. Reserve Ratio (RR) Additional Information:- LRR is a very quick and direct method for controlling the credit-creating power of commercial banks. Commercial Banks are required to maintain…
Ans – (d) Explanation:- A fall in the repo rate decreases the cost of borrowing from the central bank. It encourages commercial banks to decrease their lending rates which encourages borrowers to take loans. It leads to the creation of…
Ans – (c) Solution:- Deposit Creation = Initial Deposit × 1/LRR ₹ 10,000 = Initial Deposit × 1/40% Initial Deposit = 10,000 × 40/100 Initial Deposit = 4,000 Crores