Discussion Forum : Nabard & Other Bank Examinations
Question -
Why do banks borrow money in the call money market?
Answer: Option D
BANKS CAN BORROW MONEY IN THE CALL MONEY MARKET FOR THE FOLLOWING REASONS: TO COVER THE GAPS OR TEMPORARY MISMATCHES IN FUNDS TO MEET THE STATUTORY RESERVE REQUIREMENTS SUCH AS CASH RESERVE RATIO(CRR) & STATUTORY LIQUIDITY RATIO(SLR) TO MEET SUDDEN DEMAND FOR FUNDS ARISING OUT OF LARGE OUTFLOWS.
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BANKS CAN BORROW MONEY IN THE CALL MONEY MARKET FOR THE FOLLOWING REASONS: TO COVER THE GAPS OR TEMPORARY MISMATCHES IN FUNDS TO MEET THE STATUTORY RESERVE REQUIREMENTS SUCH AS CASH RESERVE RATIO(CRR) & STATUTORY LIQUIDITY RATIO(SLR) TO MEET SUDDEN DEMAND FOR FUNDS ARISING OUT OF LARGE OUTFLOWS.
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