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this is the amount of deposit the central bank authorise bank to keep them

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16y ago

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Related Questions

Banks current ratio should be how much?

The ideal current ratio for banks 1.33 : 1


How do you calculate credit loss ratio?

how do we calculate credit loss ratio in banks financials


What are the most five important ratios for banks?

current raiot, working capital ratio, liquidity ratio, capital adequacy ratio, net asset ratio


Who has the power to determine what the margin requirement will be for the member banks?

Usually the Central Banks of each country decide such margin requirements. Ratios like Cash Reserve Ratio, Liquidity Ratio etc are set by the Central Banks like Reserve Bank of India or Federal Reserve of USA. All member banks are expected and supposed to follow these guidelines set by the central banks.


The lowest rate of interest which banks can offer is called the?

reserve ratio ;p


What describes how lowering the required reserve ratio reduces the money supply?

When the required reserve ratio is lowered, banks can loan out more money.


What mechanism is used by commercial banks for providing credit to government?

statutory liquidity ratio


What can the Fed accomplish by raising or lowering the required reserve ratio?

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)


What is the ratio of interest on loan from banks?

It depends, among other factors, onthe country and expectations about inflation,the degree of competition between banks,the borrowers' creditworthiness.


Credit deposit ratio?

A commonly used statistic for assessing a bank's liquidity by dividing the banks total loans by its total deposits. This number, also known as the LTD ratio, is expressed as a percentage. If the ratio is too high, it means that banks might not have enough liquidity to cover any unforseen fund requirements; if the ratio is too low, banks may not be earning as much as they could be.


What is statutory liqudity 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%.


What is the purpose of the required deserve ratio?

The required reserve ratio is a regulation set by central banks that mandates the minimum fraction of deposits banks must hold as reserves and not lend out. Its primary purpose is to ensure financial stability by preventing bank runs, maintaining liquidity, and controlling the money supply in the economy. By influencing how much banks can lend, the reserve ratio also plays a crucial role in monetary policy, helping to regulate inflation and economic growth.