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Anonymous
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Asked: 2022-04-22T10:41:23+05:30 In:

Which one of the following terms indicates a mechanism used by commercial banks for providing credit to the government?

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Which one of the following terms indicates a mechanism used by commercial banks for providing credit to the government?

Poll Results

0%(a) Cash Credit Ratio ( 0 voters )
0%(b) Liquidity Adjustment Facility ( 0 voters )
100%(c) Statutory Liquidity Ratio ( 3 voters )
0%(d) Debt Service Ratio ( 0 voters )
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1 Answer

  1. Anonymous

    Ans (c) Statutory Liquidity Ratio

    Commercial banks provide long-term credit to the Government by investing their funds in government securities and short-term finance by purchasing Treasury Bills. This comes under Statutory Liquidity Ratio (SLR). SLR is the mechanism used by the Reserve Bank of India to regulate the liquidity of commercial banks.

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