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