SSC Economics Sample Paper NCERT Sample Paper-5

  • question_answer
    The base rate of commercial bank is determined by:

    A)  RBI

    B)  Ministry of Finance

    C)  Indian Banker's Association

    D)  Market Forces and cost of banks

    Correct Answer: D

    Solution :

    [d] While each bank may decide its own Base Rate, some of the criteria that could go into the determination of the Base Rate are: (i) cost of deposits; (ii) adjustment for the negative carry in respect of CRR and SLR; (iii) unallocatable overhead cost for banks such as aggregate employee compensation relating to administrative functions in corporate office, directors' and auditors' fees, legal and premises expenses, depreciation, cost of printing and stationery, expenses incurred on communication and advertising, IT spending, and cost incurred towards deposit insurance; and (iv) profit margin.

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