Advertisements
Advertisements
Question
Assertion (A): Commercial banks primarily engage in profit-oriented activities.
Reasoning (R): Commercial banks have the authority to set monetary policies, establish reserve requirements, and conduct financial stability assessments to ensure the sound functioning of the banking system.
Options
A is true but R is false.
A is false but R is true.
Both A and R are true and R explains A.
Both A and R are true but R does not explain A.
Advertisements
Solution
A is true but R is false.
Explanation:
The assertion is true because commercial banks are financial institutions that function on a commercial basis, with the primary goal of increasing profits through interest and fees. However, the reasoning is incorrect because the authority to determine monetary policies, impose reserve requirements, and oversee overall financial stability lies solely with the country’s central bank (such as the Reserve Bank of India), not commercial banks.
