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When the Reserve Bank of India reduces the Statutory Liquidity Ratio by 50 basis points, which of the following is likely to happen ?

A) India's GDP growth rate increases drastically.
B) Foreign Institutional Investors may bring more capital into our country.
C) Scheduled Commercial Banks may cut their lending rates.
D) It may drastically reduce the liquidity to the banking system.

Correct Answer:



C) Scheduled Commercial Banks may cut their lending rates.

Part of solved Currency Inflation questions and answers : General Knowledge >> Economy >> Currency Inflation

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Similar Questions

1). Consider the following statements
1. Liquidity Adjustment Facility operations help the RBI effectively transmit interest rate signals to the market.
2. Under the repo or repurchase option, banks borrow money from the RBI via the sale of securities with an agreement to purchase the securities back at a fixed rate at a future date.
Which of the statements given above is/are correct?

A). Only 1

B). Only 2

C). Both 1 and 2

D). Neither 1 nor 2

2). Which one of the following is the custodian of Foreign Exchange Reserve of the Indian Government?

A). Security Exchange Board of India

B). Insurance Regulatory Development Authority

C). Reserve Bank of India

D). None of the above

3). Consider the following statements
1. Buying and selling of the eligible securities by Reserve Bank of India is an Important feature of the open market operation.
2. Open market operation influences the volume of loans and advances made by the commercial banks in India.
Which of the statements given above is/are correct?

A). Only 1

B). Only 2

C). Both 1 and 2

D). Neither 1 nor 2

4). Which one of the following issues the currency notes and coins of one rupee and lower denomination in India?

A). SBI

B). RBI

C). Government of India

D). Ministry of Finance

5). Consider the following
1. New Broad Money (\( \Large NM_{3} \))
2. New Narrow Money
3. All Deposits with the Post Office Savings Banks
4. National Savings Certificates
Which of the components given above are correct included in the Liquidity Aggregates (L1) in the Indian Economy?

A). 1, 2, 3 and 4

B). 2 and 3

C). 1 and 3

D). 2 and 4

6). Which one among the following is correct about the money whose value comes from a commodity out of which it is made?

A). Flat money

B). Commodity money

C). Near money

D). Electronic money

7). Which one of the following money supplies is also known as Narrow Money in the Indian economy?

A). M1

B). M2

C). M3

D). M4

8). Consider the following measures
1. Repo Rate
2. Cash Reserve Requirement
3. Reverse Repo Rate
Which of the measures given above is/are major instrument(s) used in the Liquidity Adjustment Facility (LAF)?

A). 1 and 2

B). 1 and 3

C). 2 and 3

D). Only 2

9). Consider the following statements about the Reserve Requirements
1. Reserve requirement can be used as an instrument of monetary policy.
2. Required reserve ratio is used as a tool to Influence the country's borrowing and interest rates.
Which of the statements given above is/are correct?

A). Only 1

B). Only 2

C). Both 1 and 2

D). Neither 1 nor 2

10). Which of the following is/are examples of 'Near Money'?
1. Treasury bill
2. Credit card
3. Savings accounts and small lime deposits
4. Retail money market mutual funds
Select the correct answer using the codes given below

A). Only 1

B). Only 2

C). 1, 2 and 3

D). 1, 3 and 4