Module: | Priority Sector, Consumer Protection & Digital Lending
Q65: Consider the following:
Assertion (A): Inter-bank term deposits with a maturity of less than 1 year are NOT deducted while calculating Net Demand and Time Liabilities (NDTL).
Reason (R): Liabilities to the banking system are only netted off if they are pure call money borrowings.
Reason (R): Liabilities to the banking system are only netted off if they are pure call money borrowings.
✅ Correct Answer: D
The correct answer is D. Both the assertion and the reason are factually incorrect.
The fundamental principle of calculating NDTL is to determine the liabilities the banking system owes to the public.
To avoid double counting liquidity within the system, all liabilities to the banking system (inter-bank deposits/borrowings) are netted off against assets with the banking system.
This deduction applies regardless of whether the inter-bank liability is in the form of overnight call money or a term deposit, and it applies irrespective of the maturity period (less than or greater than 1 year).
The fundamental principle of calculating NDTL is to determine the liabilities the banking system owes to the public.
To avoid double counting liquidity within the system, all liabilities to the banking system (inter-bank deposits/borrowings) are netted off against assets with the banking system.
This deduction applies regardless of whether the inter-bank liability is in the form of overnight call money or a term deposit, and it applies irrespective of the maturity period (less than or greater than 1 year).