Suppose the NRB's required reserve ratio is 12%. Bank A has a deposit of Rs. 200 million, while Bank B has Rs. 100 million. Bank A has reserve of Rs.…
BBS Management of Financial Institutions · 2079 · Solved Question with Answer
Suppose the NRB's required reserve ratio is 12%. Bank A has a deposit of Rs. 200 million, while Bank B has Rs. 100 million. Bank A has reserve of Rs. 26 million and Bank B has reserve of Rs. 5 million.
a. What will be required reserve of Bank A and Bank B?
b. What will be the excess or short reserve of Bank A and Bank B?
c. Why do central banks set reserve ratio?