Here's the question bank on all the banking & financial services topics.
Which of the following options is INCORRECT?
1. A fixed interest rate is an unchanging rate charged on a liability, such as a loan or a mortgage. It might apply during the entire term of the loan or for just part of the term, but it remains the same throughout a set period. Thus option 1 is incorrect. 2. Bank Rate:A bank rate is the interest rate at which a nation's RBI lends money to domestic banks, often in the form of very short-term loans. Managing the bank rate is a method by which RBI affects economic activity. It is also called the rediscount rate. It is the rate, at which the RBI gives finance to commercial banks. Thus Option 2 is correct. 3. Reverse Repo Rate-RBI sells government securities to banks in order to absorb excess liquid from the market. This type of agreement is called a reverse repurchase agreement or reverse repo. It is the rate at which RBI borrows money from commercial banks. It is essential to control credit availability, inflation, and economic growth. Thus Option 3 is correct. 4. Statutory Liquidity Ratio (SLR):It is the ratio of a liquid asset, which all commercial banks have to keep in the form of cash, gold, and unencumbered approved securities equal to not more than 40% of their total demand and time deposit liabilities (ranges is 25?40%). Thus Option 4 is correct.
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