Question : The reserve held by Commercial Banks over and above the statutory minimum with the RBI are called:
Option 1: Cash reserve
Option 2: Deposits reserves
Option 3: excess reserves
Option 4: momentary reserves
Correct Answer: excess reserves
Solution : The correct option is excess reserve.
Reserves held by Commercial Banks in excess of the statutory minimum needed by the Reserve Bank of India (RBI) are referred to as "excess reserves" or "surplus reserves." Banks may choose to hold these money in addition to the required reserves established by the central bank. Banks may use this additional liquidity for a variety of things, including lending to other banks that require reserves or making investments.
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