{"id":91172,"date":"2025-06-01T10:48:25","date_gmt":"2025-06-01T10:48:25","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=91172"},"modified":"2025-06-01T10:48:25","modified_gmt":"2025-06-01T10:48:25","slug":"in-the-context-of-indian-economy-which-of-the-following-is-are-the-pu","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/in-the-context-of-indian-economy-which-of-the-following-is-are-the-pu\/","title":{"rendered":"In the context of Indian economy, which of the following is\/are the pu"},"content":{"rendered":"<p>In the context of Indian economy, which of the following is\/are the purpose\/purposes of &#8216;Statutory Reserve Requirements&#8217;?<\/p>\n<ul>\n<li>1. To enable the Central Bank to control the amount of advances the banks can create<\/li>\n<li>2. To make the people&#8217;s deposits with banks safe and liquid<\/li>\n<li>3. To prevent the commercial banks from making excessive profits<\/li>\n<li>4. To force the banks to have sufficient vault cash to meet their day-to-day requirements<\/li>\n<\/ul>\n<p>Select the correct answer using the code given below.<\/p>\n<p>[amp_mcq option1=&#8221;1 only&#8221; option2=&#8221;1 and 2 only&#8221; option3=&#8221;2 and 3 only&#8221; option4=&#8221;1, 2, 3 and 4&#8243; correct=&#8221;option2&#8243;]<\/p>\n<div class=\"psc-box-pyq-exam-year-detail\">\n<div class=\"pyq-exam\">\n<div class=\"psc-heading\">This question was previously asked in<\/div>\n<div class=\"psc-title line-ellipsis\">UPSC IAS &#8211; 2014<\/div>\n<\/div>\n<div class=\"pyq-exam-psc-buttons\"><a href=\"\/pyq\/pyq-upsc-ias-2014.pdf\" target=\"_blank\" class=\"psc-pdf-button\" rel=\"noopener\">Download PDF<\/a><a href=\"\/pyq-upsc-ias-2014\" target=\"_blank\" class=\"psc-attempt-button\" rel=\"noopener\">Attempt Online<\/a><\/div>\n<\/div>\n<section id=\"pyq-correct-answer\">\nThe correct option is B. The purposes of &#8216;Statutory Reserve Requirements&#8217; (CRR and SLR) include enabling the Central Bank to control the amount of advances banks can create and making people&#8217;s deposits with banks safe and liquid.<br \/>\n<\/section>\n<section id=\"pyq-key-points\">\nStatutory Reserve Requirements, specifically the Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR), are monetary policy tools used by the Central Bank (RBI).<br \/>\n1. By requiring banks to hold a portion of their deposits as reserves (cash with RBI for CRR, approved securities for SLR), the RBI limits the amount of funds banks have available for lending, thereby influencing credit creation and controlling the money supply. This directly enables the Central Bank to control the amount of advances banks can create.<br \/>\n2. CRR and SLR ensure that banks maintain a certain percentage of their liabilities in highly liquid assets (cash or approved securities), making a portion of the depositors&#8217; funds safe and available if needed, thus enhancing the safety and liquidity of deposits.<br \/>\n<\/section>\n<section id=\"pyq-additional-information\">\n3. Preventing commercial banks from making excessive profits is not the primary objective of reserve requirements. While controlling lending can indirectly impact profitability, the main goals are monetary stability, inflation control, and depositor protection.<br \/>\n4. Reserve requirements mandate holdings with the RBI (CRR) or in specific assets (SLR), not necessarily in the bank&#8217;s own vault cash for day-to-day requirements. Banks manage their day-to-day liquidity needs through other means, although reserve requirements do contribute to overall liquidity.<br \/>\n<\/section>\n","protected":false},"excerpt":{"rendered":"<p>In the context of Indian economy, which of the following is\/are the purpose\/purposes of &#8216;Statutory Reserve Requirements&#8217;? 1. To enable the Central Bank to control the amount of advances the banks can create 2. To make the people&#8217;s deposits with banks safe and liquid 3. To prevent the commercial banks from making excessive profits 4. &#8230; <\/p>\n<p class=\"read-more-container\"><a title=\"In the context of Indian economy, which of the following is\/are the pu\" class=\"read-more button\" href=\"https:\/\/exam.pscnotes.com\/mcq\/in-the-context-of-indian-economy-which-of-the-following-is-are-the-pu\/#more-91172\">Detailed Solution<span class=\"screen-reader-text\">In the context of Indian economy, which of the following is\/are the pu<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1092],"tags":[1468,1120,1190],"class_list":["post-91172","post","type-post","status-publish","format-standard","hentry","category-upsc-ias","tag-1468","tag-economic-development","tag-money-banking","no-featured-image-padding"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>In the context of Indian economy, which of the following is\/are the pu<\/title>\n<meta name=\"description\" content=\"The correct option is B. The purposes of &#039;Statutory Reserve Requirements&#039; (CRR and SLR) include enabling the Central Bank to control the amount of advances banks can create and making people&#039;s deposits with banks safe and liquid. Statutory Reserve Requirements, specifically the Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR), are monetary policy tools used by the Central Bank (RBI). 1. By requiring banks to hold a portion of their deposits as reserves (cash with RBI for CRR, approved securities for SLR), the RBI limits the amount of funds banks have available for lending, thereby influencing credit creation and controlling the money supply. This directly enables the Central Bank to control the amount of advances banks can create. 2. CRR and SLR ensure that banks maintain a certain percentage of their liabilities in highly liquid assets (cash or approved securities), making a portion of the depositors&#039; funds safe and available if needed, thus enhancing the safety and liquidity of deposits.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/in-the-context-of-indian-economy-which-of-the-following-is-are-the-pu\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"In the context of Indian economy, which of the following is\/are the pu\" \/>\n<meta property=\"og:description\" content=\"The correct option is B. The purposes of &#039;Statutory Reserve Requirements&#039; (CRR and SLR) include enabling the Central Bank to control the amount of advances banks can create and making people&#039;s deposits with banks safe and liquid. Statutory Reserve Requirements, specifically the Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR), are monetary policy tools used by the Central Bank (RBI). 1. By requiring banks to hold a portion of their deposits as reserves (cash with RBI for CRR, approved securities for SLR), the RBI limits the amount of funds banks have available for lending, thereby influencing credit creation and controlling the money supply. This directly enables the Central Bank to control the amount of advances banks can create. 2. CRR and SLR ensure that banks maintain a certain percentage of their liabilities in highly liquid assets (cash or approved securities), making a portion of the depositors&#039; funds safe and available if needed, thus enhancing the safety and liquidity of deposits.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/exam.pscnotes.com\/mcq\/in-the-context-of-indian-economy-which-of-the-following-is-are-the-pu\/\" \/>\n<meta property=\"og:site_name\" content=\"MCQ and Quiz for Exams\" \/>\n<meta property=\"article:published_time\" content=\"2025-06-01T10:48:25+00:00\" \/>\n<meta name=\"author\" content=\"rawan239\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"rawan239\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"In the context of Indian economy, which of the following is\/are the pu","description":"The correct option is B. The purposes of 'Statutory Reserve Requirements' (CRR and SLR) include enabling the Central Bank to control the amount of advances banks can create and making people's deposits with banks safe and liquid. Statutory Reserve Requirements, specifically the Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR), are monetary policy tools used by the Central Bank (RBI). 1. By requiring banks to hold a portion of their deposits as reserves (cash with RBI for CRR, approved securities for SLR), the RBI limits the amount of funds banks have available for lending, thereby influencing credit creation and controlling the money supply. This directly enables the Central Bank to control the amount of advances banks can create. 2. CRR and SLR ensure that banks maintain a certain percentage of their liabilities in highly liquid assets (cash or approved securities), making a portion of the depositors' funds safe and available if needed, thus enhancing the safety and liquidity of deposits.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/exam.pscnotes.com\/mcq\/in-the-context-of-indian-economy-which-of-the-following-is-are-the-pu\/","og_locale":"en_US","og_type":"article","og_title":"In the context of Indian economy, which of the following is\/are the pu","og_description":"The correct option is B. The purposes of 'Statutory Reserve Requirements' (CRR and SLR) include enabling the Central Bank to control the amount of advances banks can create and making people's deposits with banks safe and liquid. Statutory Reserve Requirements, specifically the Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR), are monetary policy tools used by the Central Bank (RBI). 1. By requiring banks to hold a portion of their deposits as reserves (cash with RBI for CRR, approved securities for SLR), the RBI limits the amount of funds banks have available for lending, thereby influencing credit creation and controlling the money supply. This directly enables the Central Bank to control the amount of advances banks can create. 2. CRR and SLR ensure that banks maintain a certain percentage of their liabilities in highly liquid assets (cash or approved securities), making a portion of the depositors' funds safe and available if needed, thus enhancing the safety and liquidity of deposits.","og_url":"https:\/\/exam.pscnotes.com\/mcq\/in-the-context-of-indian-economy-which-of-the-following-is-are-the-pu\/","og_site_name":"MCQ and Quiz for Exams","article_published_time":"2025-06-01T10:48:25+00:00","author":"rawan239","twitter_card":"summary_large_image","twitter_misc":{"Written by":"rawan239","Est. reading time":"2 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/exam.pscnotes.com\/mcq\/in-the-context-of-indian-economy-which-of-the-following-is-are-the-pu\/","url":"https:\/\/exam.pscnotes.com\/mcq\/in-the-context-of-indian-economy-which-of-the-following-is-are-the-pu\/","name":"In the context of Indian economy, which of the following is\/are the pu","isPartOf":{"@id":"https:\/\/exam.pscnotes.com\/mcq\/#website"},"datePublished":"2025-06-01T10:48:25+00:00","dateModified":"2025-06-01T10:48:25+00:00","author":{"@id":"https:\/\/exam.pscnotes.com\/mcq\/#\/schema\/person\/5807dafeb27d2ec82344d6cbd6c3d209"},"description":"The correct option is B. The purposes of 'Statutory Reserve Requirements' (CRR and SLR) include enabling the Central Bank to control the amount of advances banks can create and making people's deposits with banks safe and liquid. Statutory Reserve Requirements, specifically the Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR), are monetary policy tools used by the Central Bank (RBI). 1. By requiring banks to hold a portion of their deposits as reserves (cash with RBI for CRR, approved securities for SLR), the RBI limits the amount of funds banks have available for lending, thereby influencing credit creation and controlling the money supply. This directly enables the Central Bank to control the amount of advances banks can create. 2. 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