In the context of Indian economy which of the following is are the purpose purposes ...........

Economic Affairs Money Supply and Monetary Policy

In the context of Indian economy which of the following is/are the purpose/purposes of ‘Statutory Reserve Requirements’?

1. To enable the Central Bank to control the amount of advances the banks can create

2. To make the people’s deposits with banks safe and liquid

3. To prevent the commercial banks from making excessive profits

4. To force the banks to have sufficient vault cash to meet their day-to-day requirements

Select the correct answer using the code given below.

1 only

1 and 2 only

2 and 3 only

1, 2, 3 and 4

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Explanation:

Statutory Reserve Requirements are aimed at controlling the advances banks can create. It is aimed at controlling the liquidity in economy. It is not aimed at excessive profit orientation of banks. Clearing Drain and Currency Drain take care of day to day cash requirements of banks.