[Solved] The reserves held by Commercial Banks over and above the statutory minimum, with the RBI are called -

McqMate

Q.	The reserves held by Commercial Banks over and above the statutory minimum, with the RBI are called -
A.	Cash reserves
B.	Deposit reserves
C.	Excess reserves
D.	Momentary reserves
Answer» C. Excess reserves
Explanation: In banking, excess reserves are bank reserves in excess of the reserve requirement set by a central bank. They are reserves of cash more than the required amounts. Holding excess reserves has an opportunity cost if higher risk-adjusted interest can be earned by putting the funds elsewhere; the advantage of holding some funds in excess reserves is that doing so may provide enhanced liquidity and therefore more smooth operation of payment system.

883

0

Do you find this helpful?

2

View all MCQs in

Discussion

No comments yet

Related MCQs

Commercial banks create credit -
Which of the following policies would be most appropriate for the State Bank of Pakistan to follow if it wished to make it more difficult for the commercial banks to grant loans?
Cosequent upon the recommendations of the Working Group on Rural Banks, 5 Rural Regional Banks were initially set up in the year -
The type of currency issued by government as legal tender the value of which is based solely on decree or law rather than actual coin or precious metal reserves is termed as:
A high Statutory Liquidity Ratio (SLR)
Privately owned banks operating cheque current accounts, receiving deposits, taking in and paying out notes and coins and making loans are generally called
The sale of government owned equity in nationalized industries or other commercial enterprises to private investors is called:
The system of agricultural support by which market prices are fixed at above free market levels and government buys surpluses, thus supporting prices and raising farmer’s income is called:
Open market operations of RBI refer to buying and selling of -
Bull and bear are related to which commercial activity?