Bhumi Bank currently has Rs 350 million in transaction deposits on its balance sheet. The current reserve requirement is 10 percent, but the Central Bank is increasing this requirement to 11…

Bhumi Bank currently has Rs 350 million in transaction deposits on its balance sheet. The current reserve requirement is 10 percent, but the Central Bank is increasing this requirement to 11 percent. a. Show the balance sheet of the Central Bank and Bhumi Bank if Bhumi Bank converts all excess reserves to loans, but borrowers return only 50 percent of these funds to Bhumi Bank as transaction deposits. b. Show the balance sheet of the Central Bank and Bhumi Bank if Bhumi Bank converts 75 percent of its excess reserves to loans and borrowers return 60 percent of these funds to Bhumi Bank as transaction deposits.