Ways Through Which Deposits are Utilised by Banks
Q. Deposits mobilised by the banks are utilised for.
(i) loans and advances
(ii) investment in government and other approved securities in fulfilment of liquidity stipulation
(iii) investment in commercial paper, shares, debentures up to stipulated ceilings- Published on 20 Jul 15
a. Only (i)
b. Both (ii) and (iii)
c. All the above
d. None of the above
ANSWER: All the above
Deposits mobilised by the banks are utilised for loans and advances, investment in government and other approved securities in fulfilment of liquidity stipulation, and investment in commercial papers, shares, debentures up to stipulated ceilings. After the nationalisation of major commercial banks in the country, there has been marked expansion in their business, both with regard to the bank deposits as well as the bank credit. The accretion of deposits was primarily on account of time deposits which increased substantially despite the downward movement of the interest rates and reflected the "safe haven" sentiment.