Credit creation capacity of a bank depends on the cash reserve ratio and statutory liquidity ratio.
If the initial deposit (O) is Rs. 1,000 and the Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) is 5% and 20%, then the credit creation capacity will be as follows
A. Rs. 3,000
B. Rs. 5,000
C. Rs. 6,000
D. Rs. 2,000
Answer: Option A
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