Calculate the lega reserve requirements if initial deposit of 1200 corore leads to creation of total deposits of 6000 crore.

Explanation

Total deposits =6000 crore
Initial deposit =1200 crore
Money multiplier =`"(Total deposits)/(Initial deposits)"="(6000)/(1200)"=5`
Money multiplier is also calculated as:
Money multiplier =`(1)/(LRR)`
It means,
`5=(1)/(LRR) , or 5xxLRR=1`
or LRR=`1/5=0.2 ,or LRR=20%