Apart from the Cash Reserve Ratio, banks are also required to keep some reserves in liquid form in the short term, referred as __________
Show answer & explanation
Correct answer: C
Explanation
The correct answer is Option 3 i.e. Statutory Liquidity Ratio
The minimal percentage of deposits that a commercial bank must keep in the form of liquid cash, gold, or other assets is known as the Statutory Liquidity Ratio.
- Statutory liquidity ratio (SLR) is the Indian word for the minimum reserve requirement that commercial banks in the country are required to maintain.
- The term 'statutory' denotes a legal and mandatory requirement.
- Every commercial bank in India is required by the Reserve Bank of India (RBI) Act to maintain a specific quantity of demand and time deposits as liquid assets in its own vault.