Question

Legal reserve ratio in India is equal to ………… .

Answer 1

Correct option is D.

sum of cash reserve ratio and statutory liquidity ratio

1. Legal Reserve Ratio (LRR): It is the minimum ratio of deposits legally required to be kept by the commercial banks with themselves and with the central bank.
2. It’s components are:
   (a) Cash Reserve Ratio (CRR): It refers to the minimum percentage of a bank’s total deposits, which it is required to keep with the central bank.
   (b) Statutory Liquidity Ratio (SLR): It refers to minimum percentage of net total demand and time liabilities, which commercial banks are required to maintain with themselves.
   LRR = CRR + SLR.
   Hence, correct answer is option D.