GyanGram
ATTEMPT · INDIAN ECONOMY · PRELIMS 2015
When the Reserve Bank of India reduces the Statutory Liquidity by 50 basis points, which of the following is…
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When the Reserve Bank of India reduces the Statutory Liquidity by 50 basis points, which of the following is likely to happen?
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• Correct Answer: C
• SLR reduction frees bank funds for lending, increasing loanable reserves and enabling banks to reduce lending rates.
• It is a monetary transmission mechanism to boost credit flow.
• A, B, D are wrong: 50 bps change does not drastically raise GDP or reduce liquidity; it actually expands liquidity.
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