[amp_mcq option1=”Government will be able to take more loan from banks than before” option2=”Government will be able to sell more debentures to banks than before” option3=”Private sector will be able to get less credit from banks than before” option4=”Government will be able to sell fewer securities to banks than before” correct=”option3″]
The correct answer is: C. Private sector will be able to get more credit from banks than before.
The statutory liquidity ratio (SLR) is the minimum amount of liquid assets that banks are required to hold as a percentage of their net demand and time liabilities (NDTL). The SLR is set by the central bank and is used to control the money supply in the economy.
When the SLR is reduced, banks have more money available to lend to businesses and individuals. This can lead to an increase in lending and economic activity.
The government is not directly affected by changes in the SLR. However, if the SLR is reduced, banks may be more willing to lend to businesses, which could lead to increased tax revenue for the government.
The government can also sell more securities to banks when the SLR is reduced. This is because banks will have more money available to invest in securities. However, this is not a direct effect of the SLR reduction.
Therefore, the correct answer is C. Private sector will be able to get more credit from banks than before.