Question : Banks are required to keep some reserves in liquid form with themselves. This is called ______.
Option 1: marginal stability scheme
Option 2: statutory liquidity ratio
Option 3: open market operations
Option 4: legal deposit ratio
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Correct Answer: statutory liquidity ratio
Solution : The correct answer is the statutory liquidity ratio .
The minimal percentage of deposits that commercial banks are required to keep in their vaults as cash, gold assets, or government-approved securities is known as the Statutory liquidity ratio (SLR). The banks, not the Reserve Bank of India, are required to preserve these deposits. The bank's capacity to stimulate the economy with new loans is diminished by an increase in this ratio.
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