CMA Foundation · Fundamentals of Business Economics and Management · Money and Banking
A bank has net demand and time liabilities of Rs 800 crore. The RBI fixes CRR at 4% and SLR at 18%. How much of the bank's resources are left for lending and other investments after meeting both requirements?
The bank is left with Rs 624 crore. CRR takes 4% of Rs 800 crore, which is Rs 32 crore, and SLR takes 18%, which is Rs 144 crore. Together they absorb Rs 176 crore, so Rs 800 crore minus Rs 176 crore gives Rs 624 crore.
- ARs 624 croreCorrect
- BRs 656 crore
- CRs 768 crore
- DRs 144 crore
Explanation
CRR = 4% of 800 = Rs 32 crore. SLR = 18% of 800 = Rs 144 crore. Total reserves = 176 crore, leaving 800 - 176 = Rs 624 crore. Rs 656 crore deducts only SLR, and Rs 768 crore deducts only CRR.
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