A Banking system under which the banks are to raise low cost funds and invest such funds in low risk assets such as government securities is called __________.

Narrow Banking

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Color Banking

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Security Banking

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Wholesale banking

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Retail Banking

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Solution

The correct option is A Narrow Banking
A Narrow Bank is a financial institution that issues demandable liabilities & invests in assets that have nominal interest rate and credit risk. Narrow banking would restrict banks to holding liquid and safe government bonds.

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A Banking system under which the banks are to raise low cost funds and invest such funds in low risk assets such as government securities is called __________.

The correct option is A Narrow BankingA Narrow Bank is a financial institution that issues demandable liabilities & invests in assets that have nominal interest rate and credit risk. Narrow banking would restrict banks to holding liquid and safe government bonds.

The correct option is A Narrow Banking
A Narrow Bank is a financial institution that issues demandable liabilities & invests in assets that have nominal interest rate and credit risk. Narrow banking would restrict banks to holding liquid and safe government bonds.