Economics · Monetary Policy
How does an increase in the Statutory Liquidity Ratio (SLR) affect the lending capacity of commercial banks?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1It encourages banks to lower their interest rates on personal loans
- 2It reduces the amount of money banks can lend to the private sector✓
- 3It has no impact on the bank's credit creation ability
- 4It increases the funds available for lending to the public
Correct answer
It reduces the amount of money banks can lend to the private sector
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