Question : In the case of Statutory Liquidity Ratio, the commercial banks are supposed to keep a ratio of ________ in the form of liquid assets.
Option 1: Total deposits
Option 2: Term deposits
Option 3: Saving deposits
Option 4: Current deposits
Correct Answer: Total deposits
Solution : The correct answer is (a). Total deposits.
Statutory Liquidity Ratio (SLR) is a minimum percentage of a bank's total deposits that it has to keep in the form of liquid assets. Liquid assets are assets that can be easily converted into cash, such as cash, government securities, and gold.
The SLR is set by the central bank of a country to control the money supply in the economy. When the central bank raises the SLR, it reduces the amount of money that banks can lend to businesses and consumers. This helps to control inflation.
When the central bank lowers the SLR, it increases the amount of money that banks can lend to businesses and consumers. This can help to stimulate economic growth.
So, the answer is Total deposits.
