Advertisements
Advertisements
प्रश्न
Why are the banks required to keep only a fraction of deposits as cash reserves?
Advertisements
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
Explain the credit creation role of commercial banks with the help of a numerical example.
Define Credit Multiplier.
The ratio of total deposits that a commercial bank has to keep with Reserve Bank of India is called ______.
Credit money is increased when CRR:
Suppose in an economy, the initial deposit of ₹ 400 crores lead to the creation of total deposits worth ₹ 4000 crore. Then the value of reserve requirements would be ______.
Match the following:
| Column I | Column II | ||
| A. | Primary deposits | (i) | Payable on demand |
| B. | Derivative deposits | (ii) | Deposits for a fixed period of time |
| C. | Demand deposits | (iii) | Cash deposits of people |
| D. | Term deposits | (iv) | Deposits created by banks (or loan deposits) |
What is meant by credit creation?
State the advantage of a credit card over currency notes.
If CRR is 20% and initial deposit is ₹1000, total deposits created are ______.
Which factor most directly limits credit creation?
