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In the context of Indian e conomy; which of the f ollowing is/are the p urpose/purposes o f 'Statutory Reserve Requirements'?
1. To enable the Central Bank to control the amount of advances the banks can create
2. To make the people's deposits with banks safe and liquid
3. To prevent the commercial banks from making excessive profits
4. To force the banks to have sufficient vault cash to meet their day-to-day requirements
Select the correct answer using the code given below:
  • a)
    1 and 2 only
  • b)
    1 only
  • c)
    2 and 3 only
  • d)
    1, 2, 3 and 4
Correct answer is option 'A'. Can you explain this answer?
Verified Answer
In the context of Indian e conomy; which of the f ollowing is/are the ...
The correct option is Option A.
Statutory Liquidity Ratio (SLR) are maintained by the banks in 'non-cash' form which are used by then to raise cash against it (from the money market) in times of cash mismatch (and 'vault cash' means liquid cash). Profit management is not the aim behind SLR.
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In the context of Indian e conomy; which of the f ollowing is/are the ...
Statutory Reserve Requirements in Indian Economy

Purpose of Statutory Reserve Requirements:
- To enable the Central Bank to control the amount of advances the banks can create: By mandating a certain percentage of deposits to be kept as reserves, the central bank can influence the lending capacity of commercial banks. This helps in controlling inflation and stabilizing the economy.
- To make the people's deposits with banks safe and liquid: By ensuring that banks maintain a certain level of reserves, it provides a safety net for depositors. This helps in maintaining financial stability and public trust in the banking system.
Therefore, the correct answer is option 'A' - 1 and 2 only.
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In the context of Indian e conomy; which of the f ollowing is/are the p urpose/purposes o f Statutory Reserve Requirements?1. To enable the Central Bank to control the amount of advances the banks can create2. To make the peoples deposits with banks safe and liquid3. To prevent the commercial banks from making excessive profits4. To force the banks to have sufficient vault cash to meet their day-to-day requirementsSelect the correct answer using the code given below:a)1and 2 onlyb)1onlyc)2 and 3 onlyd)1, 2, 3 and 4Correct answer is option 'A'. Can you explain this answer?
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In the context of Indian e conomy; which of the f ollowing is/are the p urpose/purposes o f Statutory Reserve Requirements?1. To enable the Central Bank to control the amount of advances the banks can create2. To make the peoples deposits with banks safe and liquid3. To prevent the commercial banks from making excessive profits4. To force the banks to have sufficient vault cash to meet their day-to-day requirementsSelect the correct answer using the code given below:a)1and 2 onlyb)1onlyc)2 and 3 onlyd)1, 2, 3 and 4Correct answer is option 'A'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about In the context of Indian e conomy; which of the f ollowing is/are the p urpose/purposes o f Statutory Reserve Requirements?1. To enable the Central Bank to control the amount of advances the banks can create2. To make the peoples deposits with banks safe and liquid3. To prevent the commercial banks from making excessive profits4. To force the banks to have sufficient vault cash to meet their day-to-day requirementsSelect the correct answer using the code given below:a)1and 2 onlyb)1onlyc)2 and 3 onlyd)1, 2, 3 and 4Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for In the context of Indian e conomy; which of the f ollowing is/are the p urpose/purposes o f Statutory Reserve Requirements?1. To enable the Central Bank to control the amount of advances the banks can create2. To make the peoples deposits with banks safe and liquid3. To prevent the commercial banks from making excessive profits4. To force the banks to have sufficient vault cash to meet their day-to-day requirementsSelect the correct answer using the code given below:a)1and 2 onlyb)1onlyc)2 and 3 onlyd)1, 2, 3 and 4Correct answer is option 'A'. Can you explain this answer?.
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