what are the 5 factors of the amount of cash (till cash) requirment of a commercial bank
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Answer:
In addition to the funds required for meeting the demands of the depositors who wish to withdraw their deposits — fixed, current and saving, bankers have to keep funds for meeting the requirements of such customers, as may want accommodation in one form or another.
It is, therefore, necessary for a banker to keep both in his own vaults, as well as with his bank — generally the central bank of the country — such amounts as he may consider sufficient for his day-to-day requirements.
These funds are known as the cash reserve and are regarded as his first line of defense in times of trouble.
The main purpose of holding reserves is to avoid bank runs and generally appear solvent.
Habits of the customers and business conditions of the locality
The amount of reserve required by a bank depends on the habits of the customers and the business conditions of the locality, which the bank is serving.
Thus, in a manufacturing and commercial community, where exchanges are numerous and rapid, it might be necessary to maintain a relatively larger reserve than that in an agricultural community, among the members of which the exchanges are less frequent.