Question 6
MediumOriginal questionWhich ratio is the share of a bank's deposits that it must keep as a cash reserve with the Reserve Bank itself?
Show the answer and explanation
CorrectNot quiteAnswer B
Correct answer: B
Explanation
The Cash Reserve Ratio is held as cash with the RBI and earns the bank nothing.
The Statutory Liquidity Ratio is held by the bank itself, in cash, gold or approved securities, and does earn a return.
The distinction is where the money sits, not how much of it there is.
Worth noting
Bank Rate and the MSF rate are interest rates at which the RBI lends, not reserve requirements at all.
- Concept
- Cash Reserve Ratio against Statutory Liquidity Ratio
- Typical timeTypical
- 40 s
- Your timeYours
- —
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