Question

if the total deposits created by commercial banks is rupees 50000 crore and CRR 12% and SLR is 8%, then calculate the amount of intial deposit with the bank ​

Answer 1

Answer:

Concept:

Legal Reserve Ration is called Reserve Ration or Required Reserve Ration or Reserve Deposit Ratio or Legal Deposit Ratio

Explanation:

Legal Reserve Ratio (LRR)

= Statutory Liquidity Ratio (SLR) + Cash Reserve Ratio (CRR)

= 8% + 12% = 20%.

Money multiplier

= 1/LRR

= 1/20%

= 5.

If total deposits created is of Rs.50,000 crores, then:

Initial Deposits  

= Total Deposits / Money Multiplier

= 50000 / 5

=  10,000 crores.

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The initial deposit with the bank is 10,000 crore rupees.

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Answer 2

Answer:

The correct answer of this question is 10,000 .

Explanation:

Given - Total deposits created by commercial banks is rupees 50000 crore and CRR 12% and SLR is 8%.

To Find - Calculate the amount of initial deposit with the bank ​.

Reserve Ration, Required Reserve Ration, Reserve Deposit Ratio, and Legal Deposit Ratio are all terms used to describe the legal reserve ration.

Now, according to the question ,

Legal Reserve Ratio (LRR) = Statutory Liquidity Ratio (SLR) + Cash Reserve Ratio (CRR)

= 8% + 12% = 20%.

Money multiplier is = $\frac{1}{LRR}$

=  $\frac{1}{20}$% = 5.

If total deposits created is of Rs.50,000 crores, so,

Initial Deposits  is = Total Deposits / Money Multiplier

= $\frac{50000}{5}$ = $10,000$ crores.

The initial deposit with the bank is 10,000 crore rupees.

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