Question 18
MediumOriginal questionA bank has deposits of ₹2,000 crore and the reserve ratio is 4%. The most it can lend is
Show the answer and explanation
CorrectNot quiteAnswer B
Correct answer: B
Explanation
Reserves = 4% of 2,000 = 80.
This bank alone can lend 2,000 − 80 = ₹1,920 crore.
Worth noting
₹50,000 crore is what the whole banking system could build on the deposit, not what one bank can lend.
- Concept
- Lending by one bank
- Typical timeTypical
- 70 s
- Your timeYours
- —
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