Question

Which of the following does not constitute liabilities of commercial banks in India?

• A. Paid-up capital and reserves
• B. Time and demand deposits
• C. Money at call and short notice
• D. Borrowings

Hint:

Liabilities of commercial banks include deposits, borrowings, and any money owed to third parties, but not equity or reserves.

Answer 1

The Correct Option is A

Step 1: Understanding liabilities of commercial banks.
Liabilities of commercial banks include deposits, borrowings, and money they owe to others. However, paid-up capital and reserves are considered equity or ownership of the bank, not liabilities.

Step 2: Analysis of options.
- (A) Paid-up capital and reserves: This is correct. Paid-up capital and reserves represent the bank's equity and are not considered liabilities.
- (B) Time and demand deposits: These are liabilities because the bank owes this money to depositors.
- (C) Money at call and short notice: This is a liability as it represents money the bank must pay to others upon request.
- (D) Borrowings: Borrowings are a liability because the bank owes money to creditors.

Step 3: Conclusion.
Paid-up capital and reserves are not liabilities, so the correct answer is (A).