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Which requirement obliges a bank to hold reserves in liquid form in the short term?
ASelective Margin Ratio
BStatutory Liquidity Ratio
CIncremental Cash Ratio
DMarginal Standing Ratio
Answer & Solution
Correct answer: B. Statutory Liquidity Ratio
1. CRR fixes the cash a bank must keep as reserves.
2. Over and above that, a bank must hold short-term reserves in liquid form.
3. That second requirement is the **Statutory Liquidity Ratio (SLR)**.
4. The other three names do not exist as RBI reserve requirements, so recognising the real pair, CRR and SLR, is the whole test.
_Source: NCERT Class 12 Introductory Macroeconomics, Ch 3 "Money and Banking", section 3.3.2 Limits to Credit Creation and Money Multiplier_
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