Question

If the total deposits created by commercial banks is $Rs.10,000$ crores and legal reserve requirements is $40\%$, then amount of initial deposits will be ______.

• A. $2,000$ crores
• B. $3,000$ crores
• C. $4,000$ crores
• D. $14,000$ crores

Answer 1

The correct option is C $4,000$ crores

$Initialdeposit=Totaldeposit\times LRR$

$Initialdeposit=Rs.10,000\times 0.4$

$Initialdeposit=Rs.4000crores$