My Learning Cart
?
Categories
Account

Which of the following is a direct consequence of an increase in the SLR?

₹0.0
Login to Download
  • 📥 Instant PDF Download
  • ♾ Lifetime Access
  • 🛡 Secure & Original Content

What’s inside this PDF?

Question: Which of the following is a direct consequence of an increase in the SLR?

Options:

  1. Increased lending capacity of banks
  2. Decreased liquidity in the banking system
  3. Lower interest rates
  4. Increased foreign investment

Correct Answer: Decreased liquidity in the banking system

Solution: 

An increase in the Statutory Liquidity Ratio (SLR) reduces the funds available for banks to lend, leading to decreased liquidity in the banking system.

Which of the following is a direct consequence of an increase in the SLR?

Practice Questions

Q1
Which of the following is a direct consequence of an increase in the SLR?
  1. Increased lending capacity of banks
  2. Decreased liquidity in the banking system
  3. Lower interest rates
  4. Increased foreign investment

Questions & Step-by-Step Solutions

Which of the following is a direct consequence of an increase in the SLR?
  • Step 1: Understand what SLR (Statutory Liquidity Ratio) is. It is the percentage of a bank's net demand and time liabilities that must be maintained in the form of liquid cash, gold, or other securities.
  • Step 2: Recognize that when the SLR increases, banks are required to hold more liquid assets.
  • Step 3: Realize that holding more liquid assets means banks have less money available to lend to customers.
  • Step 4: Understand that when banks lend less money, there is less money circulating in the economy, which is referred to as decreased liquidity.
  • Step 5: Conclude that an increase in the SLR leads to reduced funds available for lending, resulting in decreased liquidity in the banking system.
No concepts available.
Soulshift Feedback ×

On a scale of 0–10, how likely are you to recommend The Soulshift Academy?

Not likely Very likely
Home Practice Performance eBooks