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UPSC 2010: Which of the following terms indicates a mechanism used by commercial banks for providing credit to the government ?
(a)Cash Credit Ratio
(b)Debt Service Obligation
(c)Liquidity Adjustment Facility
(d)Statutory Liquidity Ratio
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Not attemptedCorrect Answer: (d) Statutory Liquidity Ratio
Under the Statutory Liquidity Ratio, banks must hold a fixed percentage of their net demand and time liabilities in government-approved liquid assets (mainly Government securities). This mandatory investment channels bank funds to the Government and thus acts as a mechanism through which banks provide credit to the State. The other options refer to different monetary tools or concepts, not specifically to lending to the Government. ([en.wikipedia.org](https://en.wikipedia.org/wiki/Statutory_liquidity_ratio?utm_source=openai))
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What is the correct answer to this UPSC 2010 Indian Economy question?▼
The correct answer is option (d): Statutory Liquidity Ratio. Watch the detailed video explanation in our Sherlocking Prelims course on UnlockIAS.
Which year was this Monetary Policy & Money Supply question asked in UPSC Prelims?▼
This question was asked in UPSC CSE Prelims 2010, GS Paper 1, as Question 16. It falls under Indian Economy > Monetary Policy & Money Supply.
What is the difficulty level of this UPSC question?▼
This question is rated "easy". It tests basic recall and most well-prepared aspirants should answer it correctly.
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UPSC has asked 27 questions from Monetary Policy & Money Supply (under Indian Economy) across multiple years. Visit the topic page to see the full list and year-wise trends.