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Money and Banking — Economics STD 12 Humanities & Commerce — Question

Rajasthan BoardEnglish MediumSTD 12 Humanities & CommerceEconomicsMoney and Banking2 Marks
Question
What is Legal Reserve Ratio? Explain its components.
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Answer

  1. Legal Reserve Ratio: It is the minimum ratio of deposits legally required to be kept by the commercial banks with themselves and with the central bank.
  2. It's components are:
  1. Cash Reserve Ratio: It refers to the minimum percentage of a bank's total deposits, which it is required to keep with the central bank.
  2. Statutory Liquidity Ratio: It refers to minimum percentage of net total demand and time liabilities, which commercial banks are required to maintain with themselves.

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