Advertisements
Advertisements
Question
What is meant by Legal Reserve Ratio?
Advertisements
Solution
- Legal Reserve Ratio (LRR) is the minimum ratio of deposits, legally required to be kept as cash reserves.
- The LRR is fixed by the Central Bank.
RELATED QUESTIONS
The rate of which commercial banks borrow from the Central Bank is the:
The difference between the value of security and the amount of loan sanctioned against these securities is known as:
Define qualitative credit control policy of the RBI.
Explain how credit rationing helps to control credit in an economy.
The central bank controls credit _____ .
In order to encourage investment in the economy, the central bank may ______.
Bank rate is the rate at which:
Match the following and select the correct option:
| Column A | Column B | ||
| (i) | A rate of interest at which the central bank (RBI) lends money to member commercial banks to meet they long term needs. | A. | Cash Reserve Ratio |
| (ii) | A rate of interest at which RBI lends money to commercial banks to meet their short term needs. | B. | Statutory liquidity ratio |
| (iii) | A minimum percentage of total deposits kept by banks with the Central Bank. | C. | Repo rate |
| (iv) | A minimum percentage of total deposits to be kept by banks inform of liquid assets with themselves. | D. | Bank rate |
Read the following statements - Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): Increase in cash reserve ratio adversely affects the capacity of commercial banks to create credit.
Reason (R): An increase in cash reserve ratio reduces the excess reserves of commercial banks and hence limits their credit creating power.
Define the term Statutory Liquidity Ratio.
Differentiate between quantitative and qualitative methods of credit control.
Define the following term:
Cash Reserve Ratio.
The Central Bank is the apex monetary institution of the country. Explain its role of a custodian of foreign exchange reserves.
Explain the following function of the central bank of a country.
Fixation of margin requirement on secured loans.
What is this policy called that controls the credit supply in an economy?
Define moral persuasion.
