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Question
What is meant by Legal Reserve Ratio?
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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
Define bank rate.
Which of the following is a selective/qualitative method of credit control.
The rate of which commercial banks borrow from the Central Bank is the:
During deflation, the Central Bank usually ______.
Which of the following is not a quantitative method of credit control?
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 |
Observe the relationship of the first pair of words and complete the second pair.
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Quantitative method of credit control by the central bank :
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Publicity
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