Module: General Practice
Q16: Consider the following statements regarding the rates and eligible securities for reserve ratios:
Statement 1: The Cash Reserve Ratio (CRR) is maintained as an unencumbered cash balance with the RBI under Section 42(1) of the RBI Act, 1934 to control systemic liquidity.
Statement 2: The recent amendment explicitly excludes short-term sovereign green bonds from being classified as eligible SLR securities to prevent severe maturity mismatches in bank portfolios.
Statement 3: Under the current macroeconomic policy, the standard Cash Reserve Ratio (CRR) is maintained at 4.50% of a bank's Net Demand and Time Liabilities (NDTL).
Statement 4: The Statutory Liquidity Ratio (SLR) is currently pegged at a mandated 18.00% of NDTL for all scheduled commercial banks.
Which of the above statements is/are correct?
Statement 2: The recent amendment explicitly excludes short-term sovereign green bonds from being classified as eligible SLR securities to prevent severe maturity mismatches in bank portfolios.
Statement 3: Under the current macroeconomic policy, the standard Cash Reserve Ratio (CRR) is maintained at 4.50% of a bank's Net Demand and Time Liabilities (NDTL).
Statement 4: The Statutory Liquidity Ratio (SLR) is currently pegged at a mandated 18.00% of NDTL for all scheduled commercial banks.
Which of the above statements is/are correct?
✅ Correct Answer: A
🎯 Quick Answer:
Statements 1, 3, and 4 are correct. Statement 2 is incorrect. (Option A)Structural Breakdown: Sovereign Green Bonds are issued by the Government of India to fund environmentally sustainable projects.
Because they carry sovereign backing, they hold the highest safety rating.
Historical / Static Context: Over the last decade, the RBI has steadily brought down the SLR from over 24% to free up capital for private sector lending, stabilizing it at 18.00%. The CRR was raised to 4.50% post-pandemic to absorb excess liquidity.
The Dynamic Update (NEW) & Data: Qualitatively, the 2026 update actually includes and promotes sovereign green bonds as fully eligible SLR securities (making Statement 2 incorrect), aligning with the RBI's push for green finance.
The hard quantitative facts tested are the current benchmark reserve requirements: CRR strictly at 4.50% (Statement 3) and SLR anchored at 18.00% (Statement 4).