Consider the following statements:
1. Statutory Liquidity Ratio requirement influence the lending capacity of the financial intermediaries
2. The Gross Non Performing Asset ratio of Scheduled Commercial Banks has declined consistently for the last 5 years.

Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Question

Consider the following statements:
1. Statutory Liquidity Ratio requirement influence the lending capacity of the financial intermediaries
2. The Gross Non Performing Asset ratio of Scheduled Commercial Banks has declined consistently for the last 5 years.

Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

ONLiNE UPSC · Accepted Answer

Statement 1 is correct : The Statutory Liquidity Ratio (SLR) requirement, which mandates financial institutions to hold a certain percentage of their deposits in liquid assets, directly influences lending capacity by reducing the funds available for lending, potentially leading to higher interest rates.

Statement 2 is correct :The gross non-performing asset (GNPA) ratio of Scheduled Commercial Banks (SCBs) in India has shown a consistent decline over the past five years, reaching a multi-year low of 2.6% in September 2024.

Banking and Financial Institutions

Statutory Liquidity Ratio and Non Performing Assets

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M Question 1	⏱ 0
Consider the following statements: 1. Statutory Liquidity Ratio requirement influence the lending capacity of the financial intermediaries 2. The Gross Non Performing Asset ratio of Scheduled Commercial Banks has declined consistently for the last 5 years. Which of the statements given above is/are correct? (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2