CRR: Cash Reserve Ratio – It is the ratio of physical cash that every bank has to keep with RBI.
Current CRR – 4%
SLR: Statutory Liquidity Ratio – It is the ratio of liquid assets that every bank has to keep with RBI.
Current SLR – 23%
Need of SLR: With the SLR, the RBI can ensure the solvency of a commercial banks. It is also helpful to control the expansion of the Bank credits. By changing SLR rates, RBI can increase or decrease bank credit expansion. Also through SLR, RBI compels the commercial banks to invest in the government securities like govt. bonds.
Main use of SLR: SLR is used to control inflation and propel growth. Through SLR rate the money supply in the system can be controlled effectively.
Current CRR – 4%
SLR: Statutory Liquidity Ratio – It is the ratio of liquid assets that every bank has to keep with RBI.
Current SLR – 23%
Need of SLR: With the SLR, the RBI can ensure the solvency of a commercial banks. It is also helpful to control the expansion of the Bank credits. By changing SLR rates, RBI can increase or decrease bank credit expansion. Also through SLR, RBI compels the commercial banks to invest in the government securities like govt. bonds.
Main use of SLR: SLR is used to control inflation and propel growth. Through SLR rate the money supply in the system can be controlled effectively.
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