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    Question

    The Contribution towards priority sector lending is

    based on __________ , while the cash reserve ratio is based on __________.
    A Adjusted Net Bank Credit & Net Demand and Time Liabilities Correct Answer Incorrect Answer
    B Net Demand and Time Liabilities & Adjusted Net Bank Credit Correct Answer Incorrect Answer
    C Statutory Liquidity Ratio & Net Demand and Time Liabilities Correct Answer Incorrect Answer
    D Capital Adequacy Ratio & Adjusted Net Bank Credit Correct Answer Incorrect Answer
    E Adjusted Net Bank Credit & Capital Adequacy Ratio Correct Answer Incorrect Answer

    Solution

    The contribution towards priority sector lending is based on Adjusted Net Bank Credit (ANBC), while the Cash Reserve Ratio (CRR) is based on Net Demand and Time Liabilities (NDTL).   Adjusted Net Bank Credit (ANBC) is the sum of the bank's net demand and time liabilities and is used as a benchmark for calculating the priority sector lending targets for banks in India. On the other hand, Net Demand and Time Liabilities (NDTL) is a measure of the deposits held by a bank that are available for withdrawal on demand or after a specified time period. CRR is the percentage of NDTL that banks are required to maintain as a reserve with the Reserve Bank of India (RBI) to ensure liquidity in the banking system.  

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