When the Reserve Bank of India reduces the Statutory Liquidity Ratio by 50 basis points, which of the following is likely to happen?
India's GDP growth rate increases drastically.
Foreign Institutional Investors may bring more capital into our country.
Scheduled Commercial Banks may cut their lending rates.
It may drastically reduce the liquidity to the banking system.
SLR is a mechanism used by RBI to regulate liquidity of assets and requires the banks to invest a certain portion of their deposits in RBI approved securities or gold. When SLR is reduced, banks have more money to lend which may lead to decrease in lending rates.
"Gold Tranche" (Reserve Tranche) refers to
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