Chapter 3 Part 2 - Banking
Basic Concepts of a Commercial Bank
Different Functions of Commercial Bank
Understanding Balance sheet of a Commercial Bank
Procedure followed to Issue Currency
Different Transactions between Central Bank and Commercial Bank
Deposit Transaction between Government and Central Bank
Understanding Assets and Liabilities of Central Bank
Important Ratios Used in Banking System You are here
Currency Deposit Ratio - Meaning, Importance and Calculation
Reserve Deposit Ratio - Meaning, Importance and Calculation
Statutory Liquidity Ratio - Meaning, Importance and Calculation
Cash Reserve Ratio - Meaning, Importance and Calculation
What is Bank Rate or Repo Rate
How does Bank control Money Supply and Reserve Deposit Ratio in an Economy
Functions of Central Bank
Concept of Money Multiplier
What is Repo Rate and Reverse Repo Rate
Demonetisation
Chapter 3 Part 2 - Banking
Last updated at March 16, 2023 by Teachoo
Important Ratios Used in Banking System
Here, we will learn about following Ratios
CDR (Currency Deposit Ratio)
RDR (Reserve Deposit Ratio)
SLR (Statutory Liquidity Ratio)
Also, we will learn about Bank Rate
Lets start with CDR
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Reserve Deposit Ratio It is the Ratio of Reserves kept by bank to Total Deposits Reserve Deposit Ratio (RDR) Total Reserves of Bank Total Deposits of Bank Example Loan Rs 80000 Deposit Rs 100000 It means 20000 kept as Reserve by Bank Reserve Deposit Ratio Total Reserves of Bank RDR 20000 80000 Explanation for Reserve Deposit Ratio We know that Bank Receives Deposits and Give them as loans to Public Suppose a Bank Received 100 Lacs Deposits It cannot give whole 100 Lacs as loan It has to keep certain amount as Reserve Suppose Reserve Deposit Ratio is 10% Loan Amount =100 lacs Reserve to be kept = 10% of 100 lacs =10 lacs Banks can give loan of 100-10=90 Lacs Suppose Reserve Deposit Ratio is 20% Loan Amount =100 lacs Reserve to be kept = 20% of 100 lacs =20 lacs Banks can give loan of 100-20=80 Lacs Less the RDR More amount available to give loans More the RDR Less amount available to give loans
