why do banks maintain cash reserve??
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They maintain cash reserves for various purposes. though i am not an economist or a banker but i have to give it a try.
1. they maintain cash reserves for future purposes like
a. in case of any crime carried out in any of their branches they will have to fill it up from the cash reserve.
2. for capital purposes and for expenditural purposes. eg. to open new branches and advertise new innovations in their services.
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