Distinguish between cash reserve ratio (CRR) and statutory liquidity ratio (SLR).
Distinguish between cash reserve ratio (CRR) and statutory liquidity ratio (SLR).
Cash Reserve Ratio (CRR)
It is an essential monetary policy tool used for controlling the money supply in the economy, a regulation implemented in almost every nation by the Central Bank of that country. CRR rate is the minimum percentage of cash deposits (as specified by RBI) that every commercial bank must maintain as per the requirement of the Central Bank, i.e. RBI.
Statutory Liquidity Ratio (SLR)
The SLR is fixed by the RBI and is a form of control over the credit growth in India. It is the minimum percentage of deposits that a commercial bank has to maintain in liquid cash, gold or other securities. It is the reserve requirement that banks are expected to keep before offering credit to customers.
Cash Reserve Ratio (CRR)
It is an essential monetary policy tool used for controlling the money supply in the economy, a regulation implemented in almost every nation by the Central Bank of that country. CRR rate is the minimum percentage of cash deposits (as specified by RBI) that every commercial bank must maintain as per the requirement of the Central Bank, i.e. RBI.
Statutory Liquidity Ratio (SLR)
The SLR is fixed by the RBI and is a form of control over the credit growth in India. It is the minimum percentage of deposits that a commercial bank has to maintain in liquid cash, gold or other securities. It is the reserve requirement that banks are expected to keep before offering credit to customers.
