Under Section 42(1) of the Reserve Bank of India Act, 1934, every scheduled bank must maintain with the Reserve Bank a cash reserve, being a percentage of its net demand and time liabilities. Within which statutory range does this percentage lie?

Section 42(1) of the Reserve Bank of India Act, 1934 requires every scheduled bank to maintain with the Reserve Bank an average daily balance of cash reserves of not less than three per cent and not more than fifteen per cent of its net demand and time liabilities, the actual percentage being fixed by the Reserve Bank within this band. Non-compliance attracts penal interest under Section 42(3). The cash reserve ratio is a tool of monetary policy and must not be confused with the statutory liquidity ratio, which banks maintain in liquid assets under Section 24 of the Banking Regulation Act, 1949 and which has a ceiling of forty per cent. The ranges in the other options fall outside the statutory band of three to fifteen per cent.