In the context of the Indian economy; which of the following is/are the purpose/purposes of ‘Statutory Reserve Requirements’?
To enable the Central Bank to control the number of advances the banks can create
To make the people’s deposits with banks safe and liquid
To prevent the commercial banks from making excessive profits
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.
Options:
A . 1 and 2 only
B . 2 and 3 only
C . 1 only
D . 1, 2, 3 and 4
Answer: Option A Answer: (a) Because Reserve requirements are designed as “precautionary measures” and not to stop banks from “excessive” profit. This eliminates b and d.
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