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“In the Indian Banking… (Class 12 Economics 2026, Q9)

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EconomicsCBSE Class 12 · Board exam 2026, set 58/1/1 · 1 mark · MCQ

CBSE Class 12 Economics 2026: question 9

Set in the CBSE Class 12 board exam of 2026, paper 58/1/1, section A, question 9, for 1 mark. Try it first; the hints and our step-by-step solution are below.

Q9 · 1 mark · MCQMoney and Banking

“In the Indian Banking System, the Statutory Liquidity Ratio (SLR) plays a vital role in controlling the credit creation capacity of the Commercial Banks, as it __________.” (Choose the correct option to fill in the blank)

  1. (A)ensures that all the deposits are converted into liquid assets.
  2. (B)requires banks to maintain a percentage of deposits in the form of liquid assets.
  3. (C)sets the maximum interest rate which the banks can charge on loans.
  4. (D)promote banks from lending beyond a specific proportion of their total reserves.

Source: official question paper from cbse.gov.in (PDF). See it in the full 2026 board paper, set 58/1/1.

Hints

Open one hint at a time and try again before the next.

Hint 1

Is SLR about interest rates or about how deposits are held?

Hint 2

SLR assets are cash, gold and government securities.

Step-by-step solution

Each step shows the marks it earns, as an examiner would award them. Checked by an independent re-solve from the question paper.

  1. Statutory Liquidity Ratio (SLR) is the share of a bank's net demand and time liabilities that it must keep in liquid assets such as cash, gold and approved government securities.

  2. Because that part of deposits cannot be lent, a higher SLR reduces the funds available for credit creation. Option (B).

    1 mark

Answer: (B) requires banks to maintain a percentage of deposits in the form of liquid assets.

Where the marks are

  • Definition of SLR (1 mark)

Revise the chapter

  • Chapter: Money and Banking (notes, formulas, where marks are lost and every past question)
Practise this chapterBoard-style questions from Money and Banking, one at a time, marked against the answer key and marking points.Back to the full paper2026 board paper, set 58/1/1: every question, by section.

The question is transcribed from the official paper; figures are described in words. The solution, hints and chapter tag are ours. Spotted an error? Write tosupport@questionbuddy.in.