The banks are required to maintain a certain ratio between their cash in hand and total assets. This is called
Reviewed by Dalvoy
UPSC Civil Services preparation
- ASBR (Statutory Bank Ratio)
- BSLR (Statutory Liquid Ratio)Correct
- CCBR (Central Bank Reserve)
- DCLR (Central Liquid Reserve)
Explanation
The correct answer is B because Statutory Liquid Ratio or SLR is a monetary policy tool used by the Reserve Bank of India. It mandates that commercial banks must maintain a specific percentage of their total demand and time liabilities in the form of liquid assets. These assets can include cash, gold, or unencumbered government securities. The primary purpose of SLR is to ensure the solvency of banks and to control the flow of credit in the economy by restricting how much money banks can lend to customers. Unlike the Cash Reserve Ratio which is kept with the central bank, SLR assets are maintained by the banks themselves.
Related questions
More UPSC Prelims practice from the same subject and topic.
- Prelims 1998GS1economy
The accounting year of the Reserve Bank of India is
- Prelims 1998GS1economy
Some time back, the Government of India, decided to delicense ‘white goods’ industry. ‘White goods’ include
- Prelims 1998GS1economy
Which one of the following regions of the world supplies the maximum of our imported commodities (in terms of rupee value)?
- Prelims 1998GS1economy
The currency of the proposed European Monetary Union will be
- Prelims 1998GS1economy
Which one of the following countries has replaced Italy as the major importer of bauxite from India?
- Prelims 1998GS1economy
Consider the following statements: The price of any currency in international market is decided by the I. World Bank. II. demand for goods/services provided by the country concerned. III. stability of…