[amp_mcq option1=”Credit to farmers” option2=”Deposits of public” option3=”Borrowings from R.B.I.” option4=”Demand deposits of Industries” correct=”option2″]<\/p>\n
The correct answer is (b) Deposits of public.<\/p>\n
An asset is a resource with economic value that an individual, corporation, or country owns or controls with the expectation of economic benefit in the future from its use, sale, or conversion to cash.<\/p>\n
Deposits of public are an asset for a commercial bank because they represent money that the bank can lend out to earn interest. The bank is also obligated to return the deposits to the depositors on demand, so it must keep a certain amount of the deposits on hand as reserves. However, the bank can lend out most of the deposits, and it earns interest on the loans. This is how banks make money.<\/p>\n
Borrowings from RBI are a liability for a commercial bank. A liability is a debt or obligation that a company owes to another party. In this case, the commercial bank owes money to the RBI. The RBI is the central bank of India, and it sets monetary policy and regulates the banking system. Commercial banks are required to hold a certain amount of reserves with the RBI, and they can also borrow money from the RBI if they need to.<\/p>\n
Credit to farmers is an asset for a commercial bank, but it is a riskier asset than deposits. This is because farmers are more likely to default on their loans than other borrowers. However, the interest rates on agricultural loans are usually higher than the interest rates on other types of loans, so commercial banks can earn more money on agricultural loans.<\/p>\n
Demand deposits of industries are an asset for a commercial bank, but they are not as liquid as deposits from the public. This is because industries are more likely to write checks or make electronic transfers than individuals. As a result, commercial banks may have to wait longer to get their money back when they lend to industries.<\/p>\n
In conclusion, the correct answer is (b) Deposits of public.<\/p>\n","protected":false},"excerpt":{"rendered":"
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