Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR)
Posted on : 21 Dec 2019
Views: 4476- The cash reserve ratio (CRR) is the ratio (fixed by the RBI) of the total deposits of a bank in India which is kept with the RBI in the form of cash.
- If the CRR is raised, banks will have lesser money to lend. RBI uses CRR to absorb excess liquidity or to release funds needed for economic growth.
- This was fixed to be in the range of 3 to 15 percent. An earlier Amendment (2007) has removed the 3 percent floor and provided a free hand to the RBI in fixing the CRR.
- The statutory liquidity ratio (SLR) is the ratio (fixed by the RBI) of the total deposits of a bank which is to be maintained by the bank with itself in non-cash and cash form.
Article Related Questions
-
How is the Cash Reserve Ratio (CRR) different from the Statutory Liquidity Ratio (SLR)?
1.Unlike CRR, SLR is the ratio of the total deposits of a bank and is to be fixed by the bank itself.
2.CRR is kept in both cash and non-cash forms, while SLR is kept only in cash form.
Which of the above statements is/are incorrect?
1.1 only
2.2 only
3.Both 1 and 2
4.Neither 1 nor 2
Right Ans : Both 1 and 2
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