Question Details

Match List-I with List-II


List-1
List-II
(A) Cash Reserve Ratio (CRR)
(I) Central Bank of the Country
(B) Statutory Liquidity Ratio (SLR).
(II) The interest rate at which the money lent
by Central Donl
(C) Lender of last resort.
(III) Percentage of deposits which must kept as
cash reserves with the Central bank.
(D) Repo Rate
(IV) Reserves in liquid form in the short term


Choose the correct answer from the options given below:

Options

A

(A) - (II), (B) -(III), (C) - (I), (D) – (IV)

B

(A) - (III), (B) - (II), (C) - (I), (D) - (IV)

C

(A) - (IV), (B) - (II), (C) - (I), (D) - (III)

D

(A) - (III), (B) - (IV), (C) - (I), (D) - (II)

Show Answer

Correct Answer :

Option D

(A) - (III), (B) - (IV), (C) - (I), (D) - (II)

Solution :

The correct option is (A) - (III), (B) - (IV), (C) - (I), (D) - (II).

Let us understand the meaning of each term in List-I and match it with its correct description in List-II step-by-step:

(A) Cash Reserve Ratio (CRR):
The Cash Reserve Ratio is a specific fraction of total deposits that commercial banks are mandated to keep as cash reserves with the Central Bank (e.g., RBI in India). Therefore, (A) matches with (III) Percentage of deposits which must kept as cash reserves with the Central bank.

(B) Statutory Liquidity Ratio (SLR):
The Statutory Liquidity Ratio is the reserve requirement that commercial banks are required to maintain in the form of liquid assets (such as cash, gold, or government approved securities) before providing credit to customers. Thus, (B) matches with (IV) Reserves in liquid form in the short term.

(C) Lender of last resort:
This is a critical function of the Central Bank of a country, where it acts as a guarantor to provide liquidity to commercial banks facing financial difficulties when they have no other sources to obtain funds. Thus, (C) matches with (I) Central Bank of the Country.

(D) Repo Rate:
The Repo Rate (Repurchase Rate) is the key policy interest rate at which the Central Bank of a country lends money to commercial banks in the event of any shortfall of funds. Thus, (D) matches with (II) The interest rate at which the money lent by Central Bank.

Combining all the correct matches, we get:
(A) → (III)
(B) → (IV)
(C) → (I)
(D) → (II)

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