Module: | Priority Sector, Consumer Protection & Digital Lending
Q59: The 'Net Demand and Time Liabilities' (NDTL) is the base for calculating CRR and SLR. What does the term 'Net' specifically refer to in this context?
✅ Correct Answer: B
The correct answer is B. In the banking sector, the term 'Net' within 'Net Demand and Time Liabilities' (NDTL) explicitly refers to the netting off (subtraction) of inter-bank liabilities.
NDTL is calculated as (Demand Liabilities + Time Liabilities + Other Demand and Time Liabilities) minus (Assets with the Banking System). If Bank A has deposited ₹100 in Bank B, this inter-bank deposit is a liability for Bank B but an asset for Bank A. To prevent the artificial inflation or "double counting" of liquidity within the overall banking system, the RBI allows banks to deduct these inter-bank balances.
Therefore, the base strictly reflects liabilities owed to the public and non-banking entities.
Options A, C, and D are incorrect definitions of the netting process.
NDTL is calculated as (Demand Liabilities + Time Liabilities + Other Demand and Time Liabilities) minus (Assets with the Banking System). If Bank A has deposited ₹100 in Bank B, this inter-bank deposit is a liability for Bank B but an asset for Bank A. To prevent the artificial inflation or "double counting" of liquidity within the overall banking system, the RBI allows banks to deduct these inter-bank balances.
Therefore, the base strictly reflects liabilities owed to the public and non-banking entities.
Options A, C, and D are incorrect definitions of the netting process.