The money multiplier is 8. An initial deposit of ₹500 crore is made. Required reserves held across the banking system at the end of the process are

Explanation

1. 01

   Reserve ratio = 1 ÷ 8 = 12.5%; total deposits = 500 × 8 = 4,000.

2. 02

   Reserves = 12.5% of 4,000 = ₹500 crore: the whole first deposit ends up as reserves.