Bissoy.com
Doctors Medicines MCQs Q&A

Which of the following are the limitations in the creation of credit of commercial banks? A. The amount of cash that commercial banks possess B. Supply of collateral security C. Monetary policy of the central bank D. Allied deposits scheme E. Deposits linked with special benefits Choose the correct answer from the options given below:

Which of the following are the limitations in the creation of credit of commercial banks? A. The amount of cash that commercial banks possess B. Supply of collateral security C. Monetary policy of the central bank D. Allied deposits scheme E. Deposits linked with special benefits Choose the correct answer from the options given below: Correct Answer D and E only

The correct answer is D and E only

Key PointsCommercial Banks - A commercial bank is a type of financial organisation that handles all transactions involving public money deposits and withdrawals, lending money for investments, and other similar activities. These banks are for-profit organisations that operate solely for financial gain.

Credit Creation: Credit creation is the process by which commercial banks are able to create loans in the form of new deposits.

Important Points

Allied deposits scheme and Deposits linked with special benefits tend to reduce the capacity of the commercial to create credit since, the amount invested in these schemes is generally used by banks to provide special attached benefits and credit creation is low.

Hence, Allied deposits scheme and Deposits linked with special benefits are the limitations of Credit Creation.

Related Questions

Which of the following statements are true in context of scheduled banks?
1. All banks which are included in the Second Schedule to the Reserve Bank of India Act, 1934 are Scheduled Banks.
2. These banks comprise Scheduled Commercial Banks and Scheduled Co-operative Banks.
3. Scheduled Commercial Banks in India are categorized into five different groups - SBI, Nationalised Banks, Regional Rural Banks, Foreign Banks and Other Indian Scheduled Commercial Banks in the private sector.
4. Scheduled Co-operative Banks consist of Scheduled State Co-operative Banks and Scheduled Urban Co-operative Banks.
The question given below consists of a statement, followed by three arguments numbered I, II and III. You have to decide which of the arguments is/are ‘strong’ arguments and which is/are ‘weak’ arguments and accordingly choose your answer from the alternatives given below each question. Statement: A shortage of bank branches and ATMs across India’s hinterland is holding back Prime Minister Narendra Modi’s financial inclusion efforts and risks angering rural voters ahead of elections next year. After taking office in 2014, Modi set an ambitious target to open a bank account for every household to ensure welfare funds flow directly to India’s poor, while improving access to credit and insurance programs. He pushed policies that helped bring 310 million people into the formal banking system in just four years, according to the World Bank. Based on the arguments stated below and he information stated above, which of the following arguments state the reason for the problem, ‘But many of India’s villages still lack bank branches or ATMs to help service new customers, while the pace of building new financial infrastructure has actually slowed’.  Arguments: I. Because Modi’s government effectively forced poor citizens into the banking system by linking some welfare benefits to bank accounts, villagers have ended up stuck in long queues and struggling with ATMs that often run out of cash or break down.  II. With an election due next year, the mismatch between the government’s policies and the rural banking system is generating frustration among a key slice of India’s electorate. III. The banking system struggled to keep up, while some gains proved temporary. Nearly half of Indian bank accounts were inactive in 2017, meaning they weren’t used at all in the previous 12 months
In the context of Indian economy, which of the following is/are the purpose/purposes of 'Statutory Reserve Requirements'? 1. To enable the Central Bank to control the amount of advances the banks can create 2. To make the people's deposits with banks safe and liquid 3. To prevent the commercial banks from making excessive profits 4. To force the banks to have sufficient vault cash to meet their day-to-day requirements Select the correct answer using the code given below.
Re-arrange the following sentences into a meaningful paragraph. (A) comes into effect from today. The bank's savings account rate was 3.5 per cent during March 2003 to May 2011 for all savings bank account customers (B) The bank's decision comes two days ahead of RBI's monetary policy meet and is likely to trigger (C) with deposits of above Rs 1 crore, it said in a statement. The two-tier savings bank account interest rate (D) to 3.5 per cent, lowest in six years, a decision that will impact 90 per cent of its customers (E) The country's largest lender however will continue to pay 4 per cent interest on savings bank accounts (F) SBI today cut interest rate on savings bank account deposits up to Rs 1 crore by 0.5 per cent (G) rate war among peers. SBI's savings bank account base is of around Rs 9 lakh crore.
The Reserve Bank of India (RBI) acts as a banker’s bank. This would imply which of the following ? 1. Other banks retain their deposits with RBI 2. The RBI lends funds to the commercial banks in times of need 3. The RBI advises commercial banks on monetary matters Select the correct answer using the code given below : 
The Reserve Bank of India (RBI) acts as a bankers' bank. This would imply which of the following? 1. Other banks retain their deposits with the RBI. 2. The RBI lends funds to commercial banks in times of need. 3. The RBI advises commercial banks on monetary matters. Select the correct answer using the codes given below:
Consider the following statements. (a) Letter of credit is a primary function of commercial bank. (b) There is no difference between current account deposits and saving account deposits of a commercial bank. (c) Credit money is created by the central bank of a country. Which of the statement/s given above is/are incorrect ?
Rithika had Rs 8000. She invested some of it in savings scheme P and the rest ofthe money in savings scheme Q. She invested for 3 years in savings scheme P and for2 years in savings scheme Q. savings scheme P offers SI at a rate of 20% pa whilesavings scheme Q compounded annually at the rate of 30% pa. The interest receivedfrom savings scheme P is 930 more than the interest received from savings scheme Q.If Rs 1500 is debited from the invested amount of savings scheme P then find thedifference between the amount invested by Rithika in savings scheme P & savingsscheme Q.
Consider the following statements : a. The Reserve Bank of India is the main agency for implementing the monetary policy. b. To boost economic development is the aim of monetary policy. c. Bank Rate is an instrument of monetary policy. Which of the statements given above are correct ?
The main features of Bhamashah Yojana are
1. Each family is issued a Bhamashah card in the name of the female head of the family.
2. Bhamashah card is linked to the bank account of the lady.
3. Multiple cash benefits will be transferred to the bank accounts of the beneficiaries.
4. All non-cash benefits will also be transferred to the bank accounts of the beneficiaries.
Select correct answer -