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Ans – (c) Explanation:- Conditions for a Financial Institution to become a Bank: The main function of commercial banks is to accept deposits and advance loans. A financial institution can be a banking institution only when it performs both the…
Ans – (a) Explanation:- It is one of the most important activities of commercial banks. Through the process of money creation, commercial banks are able to create credit, which is in far excess of the initial or Primary Deposits.
Ans – (a) Explanation:- Margin Requirements:- The margin requirement refers to the difference between the current value of the security offered for a loan (called collateral and the value of the loan granted. Suppose, a person mortgages his house worth…
Ans – (c) Explanation:- Money Multiplier = 1/LRR Money Multiplier = 1/10% Money Multiplier = 100/10 Money Multiplier = 10 times
Ans – (a) Explanation:- The Central Bank is an Apex body that controls, operates, regulates, and directs the entire banking and monetary structure of the country. Central Bank:- It is known as the apex body as it occupies the topmost…
Ans – (d) Government spending is a measure of fiscal policy of the government to control the money supply. The government can increase its spending on infrastructure and subsidies to increase the money supply. On the other hand, the government…
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…