GyanGramQuestion
When the Reserve Bank of India reduces the Statutory Liquidity by 50 basis points, which of the following is likely to happen?
PRELIMS 2015 · INDIAN ECONOMY
When the Reserve Bank of India reduces the Statutory Liquidity by 50 basis points, which…
Attempt this previous-year question. The correct option stays hidden until you choose.
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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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