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    Question

    Which of the following can be said to be a way by which

    commercial banks provide credit to the government?
    A Cash Credit Ratio Correct Answer Incorrect Answer
    B Debt Service Obligation Correct Answer Incorrect Answer
    C Liquidity Adjustment Facility Correct Answer Incorrect Answer
    D Statutory Liquidity Ratio Correct Answer Incorrect Answer
    E Marginal standing facility Correct Answer Incorrect Answer

    Solution

    Statutory Liquidity Ratio  or SLR is the minimum percentage  of deposits that a commercial bank has to maintain in the form of liquid  cash, gold and un-encumbered approved securities. Since these securities are majorly the Government securities, by investing in them, banks are providing credit to the government.

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