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Two essential conditions to become a bank are: 1. Accepting deposits 2. Advancing of loans In deposits, a commercial bank must accept the demand deposits i.e. current account and savings accounts Additional information:- A Commercial Bank is an institution that…
Ans – (c) Explanation:- Statement 1 and 2 are true as the Reserve Bank of India keeps a certain percentage of deposits of commercial banks as reserve in the form of CRR to avoid to much lending to the public.…
Ans – (c) Explanation:- Statement 1 is true. All the coins are issued by the Finance Ministry of India. Statement 2 is false as one rupee note is not issued by the Reserve Bank of India. it is issued by…
Ans – (b) Explanation:- Statement 1 is false, CRR and SLR are not the same and one thing. Cash Reserve Ratio (CRR):- It refers to the minimum percentage of net demand and time liabilities, to be kept by commercial banks…
Ans – (c) Explanation:- Statement 1 is true. The value of the money multiplier is determined by the reserve ratio prevailing in the monetary system. Statement 2 is false as it is inversely related to the LRR. Money Multiplier =…
Ans – (a) Explanation:- Statement 1 is correct as the statutory liquidity ratio is one of the tools of the monetary policy to control the credit creation. the monetary policy is determined by the Reserve Bank of India. Statement 2…
Ans – (c) Explanation:- Statement 1 is true, as commercial banks are able to lend money which is a number of times more than their cash reserves. for example:- Initial Deposits (Cash Reserves) = ₹ 1,000 LRR = 10% Credit…
Ans – (b) Statement 1 is false as all financial institutions are not banking institutions. A financial institution to be a bank must accept deposits and advance the loans. As far as accepting deposits, a financial institution must accept the…
Ans – (d) Explanation:- Statement 1 is false as the central bank is fully owned by the government of India. The Reserve Bank of India was established on April 1, 1935 in accordance with the provisions of the Reserve Bank…
Ans – (a) Explanation:- Statement 1 is correct as a decrease in repo rate and reverse repo rate enhances the credit-creating power of commercial bank. Repo Rate: Repo rate is the rate at which the central bank of a country…