Multiple choice

In the context of Indian economy; which of the following is/are the purpose/purposes of Statutory Reserve Requirements?

  1. To enable the Central Bank to control the amount of advances the banks can create.
  2. To make the people's deposits with banks safe and liquid.
  3. To prevent the commercial banks from making excessive profits.
  4. To force the banks to have sufficient vault cash to meet their day-to-day requirements.

Which of the following is the correct option?

  1. 1 only

  2. 1 and 2 only

  3. 2 and 3 only

  4. 1, 2, 3 and 4
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Statutory Reserves Requirements include Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR). First statement is correct. Second statement is incorrect because of the term liquid in that. Third statement is obviously incorrect. Fourth statement is partially correct for SLR but does not stand correct for CRR so it is incorrect.

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