The fraction of their total deposits which commercial banks keep as reserves is called the:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Reserve deposit ratio
The reserve deposit ratio is the share of their total deposits that banks keep as reserves.
Option (1) Money multiplier — Incorrect. This is the ratio of total money supply to high powered money.
Option (2) Currency deposit ratio — Incorrect. This is the ratio of money the public holds as currency to what it holds as deposits.
Option (3) Statutory Liquidity Ratio — Incorrect. This is the share of deposits banks must keep in specified liquid assets.
Option (4) Reserve deposit ratio — Correct. It is defined in the question’s own words.
NCERT (2026-27): Glossary: “Reserve deposit ratio - The fraction of their total deposits which commercial banks keep as reserves.” Glossary: “Currency deposit ratio - The ratio of money held by the public in currency to that held as deposits in commercial banks.” Glossary: “Money multiplier - The ratio of total money supply to the stock of high powered money in an economy.” Glossary: “Statutory Liquidity Ratio (SLR) - The fraction of their total demand and time deposits which the commercial banks are required by RBI to invest in specified liquid assets.” |