GyanGramIn the context of Indian economy which of the following is/are the purpose/purposes of ‘Statutory Reserve Req…
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In the context of Indian economy which of the following is/are the purpose/purposes of ‘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 commercial banks from making excessive profits
4. To force the banks to have sufficient vault cash to meet their day-to-day requirements
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• Correct Answer: B
• Statutory Reserve Requirements (CRR/SLR) are quantitative monetary policy tools enabling RBI to control banks' credit creation capacity.
• They ensure liquidity buffer but primary purpose is monetary control, not depositor safety (DICGC) or bank profits.
• Vault cash for day-to-day needs is managed internally by banks, not enforced by CRR/SLR.
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