Explain the distinction between 'Statutory Liquidity Ratio' and 'Cash Reserve Ratio'.

Open in App

Solution

Basis For Comparison Cash reserve ratio Statutory liquidity ratio
1. Meaning CRR is the percentage of money which the bank has to keep with the Central bank of India in form of cash.
The bank has to keep a certain percentage of their Net time and demand liabilities in the form of liquid assets as specified by Reserve Bank of India.
2. Form Cash Cash and other assets like gold and government securities
3. Effect It controls excess money flow in the economy. It helps in meeting out the unexpected demand of any depositor by selling the bonds.
4. Regulate Liquidity in the economy Credit growth in the economy.

Suggest Corrections

Similar questions

Explain the meaning of cash reserve ratio and statutory liquidity ratio.

Join BYJU'S Learning Program

Basis For Comparison	Cash reserve ratio	Statutory liquidity ratio
1. Meaning	CRR is the percentage of money which the bank has to keep with the Central bank of India in form of cash.	The bank has to keep a certain percentage of their Net time and demand liabilities in the form of liquid assets as specified by Reserve Bank of India.
2. Form	Cash	Cash and other assets like gold and government securities
3. Effect	It controls excess money flow in the economy.	It helps in meeting out the unexpected demand of any depositor by selling the bonds.
4. Regulate	Liquidity in the economy	Credit growth in the economy.