When the Reserve Bank of India reduces the Statutory Liquidity by 50 basis points, which of the following is likely to happen?

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CollectorBabu · Accepted Answer

Correct Answer: Scheduled Commercial Banks may cut their lending rates. In order to have more liquidity to banking system, Reserve Bank of India sometimes reduces Statutory Liquidity Ratio to certain required basis points. Lowering of SLR allows banks to park less money with RBI through securities cash etc and can lend extra money, so option C is correct. The idea of GDP is to keep India growing financially by creating various jobs and having good standard of living. It is not in relation with lowering SLR by Reserve Bank of India, so it is incorrect. Lowering of SLR with 50 basis points made by RBI is concern with lending rates and not liquidity in banking so this is also incorrect.

When the Reserve Bank of India reduces the Statutory Liquidity by 50 basis points, which of the following is likely to happen?

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