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Formal Sector Credit

The Reserve B...

Question

The Reserve Bank of India ensures that banks do not lend out all their deposits as loans.

A

True

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B

False

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Solution

The correct option is A True

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Q. Which of the following statements about banking operations is correct as they help banks to run their shops?
A. The public holds as much currency (M) as it desires to hold with it and therefore any additional money earned by it is placed in the form of deposits with banks.
B. The banks lend all the deposits received by them from public up to the minimum legal cash reserve ratio requirement determined by the RBI. It means banks do not keep any excess cash reserves with themselves.
C. The minimum legal Cash Reserve ratio is set by the RBI.
D. Bank's assets are only in the form of Cash Reserves and loans and its liabilities comprise only of the demand deposits.

Q. The Reserve Bank of India has directed all the banks to ensure that the names of their customers, individuals or corporates, do not appear in any list published by the Security Council Committee. This act/directive of the RBI is to ensure which of the following?

Q. Why does the Reserve Bank of India require banks to hold back a portion of their deposits as cash with themselves?

Q. The Reserve Bank of India sets a minimum rate below which banks are not authorised to lend to their customers. This rate is known as :

Q. Can banks use all deposits as loans?

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