CASE BASED QUESTIONS ;
Read the following article and answer the following questions given below
The RESERVE BANK of India unexpectedly cut its key deposits rate , for the second time in three weeks , to
discourage banks from parking idle funds with it and spur lending instead , to revive a flagging economy
amid the corona virus lockdown.
This week, Prime Minister Narendra Modi extended until May 3 a lockdown of the population of 1.3 billion
as INDIA,s tally of infections exceeded 10,000 , despitr the three-week shutdown ordered from March 24.
The RBI cut its reverse repo rate by 25 basis points (bps) to 3.75% with immediate effect, Governor
Shaktikanta Das told a video conference. The rate had already been cut by 90 bps on March 27.
The surplus liquidity in the banking system has risen significantly in the wake of government spending and
the various liquidity enhancing measures undertaken by the RBI he had .
In order to encourage banks to deploy these surplus funds in investments and loans in productive sectors of
the economy , it has been decided to reduce the fixed-rate reverse repo rate.
2. The Reverse bank of India lowered reverse repo rate to discourage banks from parking idle funds with
_____________ (RBI \ COMMERCIAL BANKS )
3. RBI measures of reduction in reverse repo rate is done to enable commercial banks
a) To use the surplus funds for investment
b) To grant loans for productive purposes
c) To widen economic and financial landscape
d) All of these
4. Reverse repo rate is __________ (increased \ decreased) to correct excess demand.
5. When reverse repo rate is reduced , it __________
a) Discourage the commercial banks to park their surplus funds with RBI
b) Encourage the commercial banks to park their surplus funds with RBI
c) Both (a) and (b)
d) Neither (a) nor (b)
Posted by Prachi Garg
3 years, 9 months ago
Shivansh Garg 3 years, 9 months ago
2Thank You