Three of the following form part of the reserves of a commercial bank. Which one is the odd one out?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Loans given by the bank to the public
A bank’s reserves are its deposits with the RBI and its cash, kept partly as cash and partly as bonds and treasury bills issued by the RBI. Loans are a separate asset: Assets = Reserves + Loans.
NCERT (2026-27): “3.3 Money Creation by Banking System … 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. … |