SSC CGL 2025 Tier-I · 23 September 2025, Shift 3 · General Awareness · Question 19 of 100

We transcribed this text from the pictures on a candidate's response sheet for this shift; the answer is the key SSC colour-marked on that sheet. Solution last reviewed 13 September 2026.

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SSC does not publish CGL question papers or a public answer key. From 2025 the candidate response sheet prints every question and option as a picture, so the text here is transcribed from those pictures for this shift and checked against them independently; where the layout carries meaning, the picture is shown as well. Each answer is the key SSC colour-marked on that sheet. SSC released a tentative key for challenge and later its final one, both only to candidates behind a login, and the sheet does not say which of the two it carries. The solutions are written by UnlockIAS.

Read the below statements marked as Assertion (A) and Reason (R). Mark the correct option: Assertion (A): CRR (Cash Reserve Ratio) and SLR requirements increase the lending capacity of banks. Reason (R): These requirements reduce the amount of money banks can lend to the public.

(a)Both A and R are true, and R is the correct explanation of A.
(b)Both A and R are true, but R is not the correct explanation of A.
(c)A is true, but R is false.
(d)A is false, but R is true.

Answer

Why

Correct — D. A is false. CRR makes banks keep a share of their deposit liabilities as cash with the RBI. SLR makes them hold a share in liquid assets such as government securities.

Money locked away under either rule cannot be lent, so both reduce lending capacity.

R is true. It states exactly that reduction → option (d).

Why the others are wrong

(a)
Both A and R are true, and R is the correct explanation of A. — A is false, so this fails at once. Higher CRR and SLR shrink the funds a bank can lend, which is what R says and the opposite of A.
(b)
Both A and R are true, but R is not the correct explanation of A. — A is false, so 'both true' fails. Reserve requirements take money out of lending, which reduces lending capacity rather than increasing it.
(c)
A is true, but R is false. — This reverses the truth values. R is the true statement: reserve requirements cut the money banks can lend. A, claiming they increase lending capacity, is false.

Concept

Cash Reserve Ratio (CRR) is the share of a bank's net demand and time liabilities that it must keep as cash balances with the RBI.

Statutory Liquidity Ratio (SLR) is the share it must hold itself in liquid assets such as cash, gold and approved government securities.

Money held under either rule cannot be lent. A higher ratio curbs credit, and a lower one releases lendable funds.

Cutting CRR or SLR does free money for lending, and that half-memory is what makes A sound plausible. But A says the requirements themselves raise lending capacity, and they do the opposite.

Key facts

CRR is kept as cash with the RBI, under Section 42 of the RBI Act, 1934.
SLR is held by banks themselves in cash, gold or approved securities, under Section 24 of the Banking Regulation Act, 1949.
A higher CRR or SLR reduces the funds banks can lend.
A higher CRR lowers the money multiplier.

Study next

The money multiplier and how CRR affects itRepo rate and reverse repo rateOpen market operations

Common traps

Remembering that a CRR cut frees money and concluding that the requirement itself raises lending capacity.
Marking 'both true' because R sounds like an explanation. Check whether each statement is true first.

Here reserve requirements are tested inside an Assertion–Reason pair. The same effect, a higher CRR reducing the banking system's capacity to create money, is statement 3 at 24 Sep 2025, 12:30, GA Q.19 (keyed: only 1 and 3).

Related PYQs

No directly related past PYQ was found.

Topic: Economic Scene — all 144 SSC CGL questions on it, every solved shift.