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प्रश्न
Why are the banks required to keep only a fraction of deposits as cash reserves?
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उत्तर
There are two reasons:
- Not all depositors approach the banks for withdrawal of money at the same time, and also that normally they withdraw a fraction of deposits.
- There is a constant flow of new deposits into the banks.
Therefore, to meet the daily demand for withdrawal of cash, it is sufficient for banks to keep only a fraction of deposits as cash reserves.
संबंधित प्रश्न
Answer the following question.
Explain, using a numerical example, how a reduction in reserve deposit ratio, affects the credit creation power of the banking system.
Credit creation by the commercial bank is determined by ______.
Read the given extract carefully and answer the following questions.
| Mr. X wanted to buy an expensive motorcycle for his son but he did not have sufficient money to buy it. He approached a public sector commercial bank for the loan. The bank asked Mr. X to deposit 20% cash of the loan amount and rest 80% of the loan amount was given by the bank. |
- Briefly explain a Commercial Bank.
- What is the regulation of consumer credit in selective credit control?
- Name the bank which controls all the commercial banks and financial institutions in the country.
The ratio of total deposits that a commercial bank has to keep with Reserve Bank of India is called ______.
Match the following and select the correct option.
| Column A | Column B | ||
| (i) | A deposit created by a customer | A. | Term deposit |
| (ii) | A deposit created by bank when loan is granted | B. | Demand deposits |
| (iii) | Deposits payable by bank on demand | C. | Initial deposit |
| (iv) | Deposits the amount of which can be withdrawn only after a fixed period of time | D. | Secondary deposit |
What are secondary (derivative) deposits?
How money multiplier is related to Legal Reserve Ratio?
If CRR is 20% and initial deposit is ₹1000, total deposits created are ______.
Which factor most directly limits credit creation?
"Loans create deposits" means banks grant loans by ______.
