Banking Awareness Test for IBPS, RBI, SBI, NABARD & other Bank Examinations

Q.  Why do banks borrow money in the call money market?

a. To meet sudden demand for funds arising out of large outflows
b. To fill the temporary mismatches in funds
c. To meet the Statutory reserve requirements
d. All of the above


ANSWER: See Answer
 
Banks can borrow money in the call money market for the following reasons: To cover the gaps or temporary mismatches in funds To meet the Statutory reserve requirements such as Cash Reserve Ratio(CRR) & Statutory Liquidity Ratio(SLR) To meet sudden demand for funds arising out of large outflows.
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