Identify the liabilities of the commercial banks from the following:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Deposits held with commercial banks
When people keep money in a bank, the bank holds it but must pay it back whenever they ask for it. So the deposits people keep with a bank are what the bank owes to others, its main liabilities; on its balance sheet they stand against its assets, the things it owns or can claim from others.
Why the other options are incorrect
Option (2) Government securities held by bank — Incorrect. Securities that the bank holds are claims of the bank on the government, so they are its assets.
Option (3) Cash reserve ratio with RBI — Incorrect. Reserves kept with the RBI are the bank’s own deposits with the central bank, an asset, just as our deposits with a bank are our assets.
Option (4) SLR with commercial banks — Incorrect. The statutory liquidity ratio is the part of deposits that a bank must keep in liquid form. These liquid reserves are things the bank owns, so they too are assets.
NCERT (2025-26): “3.3 Money Creation by Banking System … Balance sheet is a record of assets and liabilities of any firm. Conventionally, the assets of the firm are recorded on the left hand side and liabilities on the right hand side. Accounting rules say that both sides of the balance sheet must be equal or total assets must be equal to the total liabilities. Assets are things a firm owns or what a firm can claim from others. In case of a bank, apart from buildings, furniture, etc., its assets are loans given to public. When the bank gives out loan of Rs 100 to a person, this is the bank’s claim on that person for Rs 100. Another asset that a bank has is reserves. Reserves are deposits which commercial banks keep with the Central bank, Reserve Bank of India (RBI) and its cash. These reserves are kept partly as cash and partly in the form of financial instruments (bonds and treasury bills) issued by the RBI. Reserves are similar to deposits we keep with banks. We keep deposits and these deposits are our assets, they can be withdrawn by us. Similarly, commercial banks like State Bank of India (SBI) keep their deposits with RBI and these are called Reserves. Assets = Reserves + Loans Liabilities for any firm are its debts or what it owes to others. For a bank, the main liability is the deposits which people keep with it.…” |