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Social Science (087) — AI-generated practice question

AI-generated practice question — model-generated for extra practice, not a previous-year CBSE board question.

Q1. [1] straightforward exam-ready
[mcq] Banks do not keep all the money deposited with them as cash. Why do banks keep only a small proportion of their deposits as cash reserves? (A) To pay salaries and operational expenses (B) Because not all depositors withdraw their money at the same time, and the rest can be lent out (C) Because the RBI allows banks to destroy excess currency (D) To meet the collateral requirements of borrowers
  1. A 25 per cent
  2. B 15 per cent
  3. C 5 per cent
  4. D 50 per cent
Generated by claude-sonnet-4-6 · 2026-06-26 13:22 · grounding rag
Model Answer

(B) Because not all depositors withdraw their money at the same time, and the rest can be lent out.

Banks in India keep about 5 per cent of deposits as cash reserves (Option C).

Explanation

The question has a mismatch: the question body asks why (answered by option B), but the listed options A–D are percentages. The passage clearly states banks hold about 5 per cent of deposits as cash. Mention both: the correct reason (B) and the correct percentage (5 per cent / Option C) to cover all parts of the question.

Previous-year CBSE Grade 10 board exam questions, organised by subject and chapter, each with a model answer — free to read and print.