Assertion (A): A bank cannot lend out all of its deposits.
Reason (R): It must keep part of its deposits as reserves to meet withdrawals and the RBI's requirement.

Both A and R are true, and R is the correct explanation of A.Correct answerYour answerBoth A and R are true, but R is not the correct explanation of A.Correct answerYour answerA is true, but R is false.Correct answerYour answerA is false, but R is true.Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer A

Correct answer: A

Reserves are needed both by law and to pay depositors who withdraw. R explains A.

Concept: Why banks keep reserves
Typical timeTypical: 70 s
Your timeYours: —

The rule this testsWhat commercial banks do

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Assertion (A): A bank cannot lend out all of its deposits.Reason (R): It must keep part of its deposits as reserves to meet withdrawals and the RBI's requirement.

Explanation

Assertion (A): A bank cannot lend out all of its deposits.
Reason (R): It must keep part of its deposits as reserves to meet withdrawals and the RBI's requirement.