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Qualitative Instruments

The ratio of ...

Question

The ratio of total deposits that a commercial bank has to keep with Reserve Bank of India is called:

A

Statutory Liquidity Ratio

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B

Deposit Ratio

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C

Cash Reserve Ratio

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D

Reserve ratio

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Solution

The correct option is D Cash Reserve Ratio
Cash reserve ratio is the share of a banks total deposit that is mandatory to be maintained as by the RBI in the form of liquid cash.

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Similar questions

Q. Cash reserve ratio and statutory liquidity ratio are fixed by the commercial banks themselves.

Q. Calculate the total deposit created by commercial banks if reserve ratio is

10 %

and primary deposit is

R s . 1, 250

Q. ___________ refers to that portion of total deposits of a commercial bank, which it has to keep with RBI in the form of cash reserves.

Q. With the help of cash reserve deposited by commercial banks with Central bank commercial banks can _______________.

Q. Read the following statements carefully and choose the correct answer from the following:

Statement 1 – State Bank of India (Commercial Bank) receives initial deposit of ₹100 crore and Liquidity Reserve Ratio (LRR) is 10%.

Statement 2 – SBI is required to keep only 10% as reserve i.e. (₹10 crore) and can lend the remaining amount, i.e. ₹90 crore.

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