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Question

________ refers to the portion of total deposit of a commercial bank required to be kept with itself in cash.

A
CRR
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B
SLR
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C
Time Deposit
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D
Term Deposit
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Solution

The correct option is C SLR

Statutory Liquidity Ratio (SLR) refers to liquid assets i.e. cash that the commercial banks must hold with themselves on daily basis as a portion of their total deposits. SLR is determined by the central bank and is a legal requirement to be fulfilled by the commercial banks. It is increased at the time of inflation to reduce the money supply in the economy and decreased at the time of deflation to increase the money supply in the economy.


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