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statutory liquidity ratio
When the required reserve ratio is raised, banks must loan out a smaller portion of their reserves, resulting in fewer loans.
The ideal current ratio for banks 1.33 : 1
current raiot, working capital ratio, liquidity ratio, capital adequacy ratio, net asset ratio
Statutory liqudity ratio means all the banks maintained it in the form of cash in hand (exclusive of the minimum cash reserve ratio),Current account balances with SBI and other public sector commercial banks, unencumbered approved securities and gold. RBI prescribes SLR from 25% to 40%.
So that the bank's don't run out of money when customers make withdrawals.
When the required reserve ratio is lowered, banks can loan out more money.
When the required reserve ratio is high, banks must loan out a smaller portion of their reserves, resulting in fewer loans.
statutory liquidity ratio
When the required reserve ratio is raised, banks must loan out a smaller portion of their reserves, resulting in fewer loans.
When the required reserve ratio is raised, banks must loan out a smaller portion of their reserves, resulting in fewer loans.
When the required reserve ratio is high, banks must loan out a smaller portion of their reserves, resulting in fewer loans.
If they lower the ratio, banks do not have to hold as much cash (which gains no interest), the banks will attempt to loan this money out and make money, this can stimulate investment. Increase or decrease in the money supply (APEX)
The ideal current ratio for banks 1.33 : 1
When the required reserve ratio is lowered, banks can loan out more money.
When the required reserve ratio is raised, banks must loan out a smaller portion of their reserves, resulting in fewer loans.
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