Under Statutory liquidity ratio, commercial banks are required to keep a fraction of _________ in form of liquid assets.
Show answer & explanation
Correct answer: B
Explanation
The correct answer is option 2 i.e. total demand and term deposits.
Under the Statutory Liquidity Ratio (SLR), commercial banks are required to keep a fraction of their total demand and term deposits in the form of liquid assets.
This requirement is mandated by the central bank of a country and helps ensure that banks maintain a certain level of liquidity, which can be used in times of financial stress.