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Determinants of Money Supply

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Question

The percentage of demand deposits which the commercial banks are legally required to maintain as their liquid assets is called:

A

CRR

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B

Repo rate

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C

SLR

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D

Reverse repo rate

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Solution

The correct option is C
SLR

Statutory Liquidity Ratio (SLR) is the percentage of demand deposits which the commercial banks are legally required to maintain as their liquid assets.

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Q. Which of the following is/are key policy rates used by RBI to influence interest rates?
A. Bank Rate and Repo Rate
B. Reverse Repo Rate
C. CRR and SLR

SLR requires the commercial banks to build their liquid assets by way of:

Q.  Repo rate or repurchase rate is referred to as the rate at which the central bank (RBI) lends money to the commercial banks for meeting short-term fund requirements in order to maintain liquidity

Q. _____________ refers to the minimum percentage of total demand and time deposits which commercial banks are required to maintain with themselves.

[0.80 marks]

Q. Reverse Repo Rate is the rate at which Central Bank ___________________.

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