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Cash Reserve Ratio (CRR) & Statutory Liquidity Ratio (SLR) : Presented by Bhavana B

Cash Reserve Ratio (CRR) refers to the minimum amount of cash that banks must keep with the Reserve Bank of India. Currently it is set at 4%. Statutory Liquidity Ratio (SLR) refers to the minimum amount of liquid assets like cash, gold or government approved securities that banks must maintain, currently set at 23%. Both ratios are used by RBI to control the money supply in the economy and are changed periodically based on economic conditions. Non-compliance results in banks paying interest to RBI. A decrease in either ratio frees up more funds for banks to lend and invest.

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31 views9 pages

Cash Reserve Ratio (CRR) & Statutory Liquidity Ratio (SLR) : Presented by Bhavana B

Cash Reserve Ratio (CRR) refers to the minimum amount of cash that banks must keep with the Reserve Bank of India. Currently it is set at 4%. Statutory Liquidity Ratio (SLR) refers to the minimum amount of liquid assets like cash, gold or government approved securities that banks must maintain, currently set at 23%. Both ratios are used by RBI to control the money supply in the economy and are changed periodically based on economic conditions. Non-compliance results in banks paying interest to RBI. A decrease in either ratio frees up more funds for banks to lend and invest.

Uploaded by

Dhivya
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Cash Reserve Ratio(CRR) &

Statutory Liquidity Ratio(SLR)

Presented By
Bhavana B

CRR
Cash reserve Ratio (CRR) is the amount of
Cash that the banks have to keep with RBI.
This Ratio is basically to drain out the
excessive money from the banks.
Limit: The minimum value of CRR was
statutorily fixed at 3% and the maximum was
fixed at 15%.
Present CRR :
Cash
Reserve
Ratio
(CRR)

4.00%(w.e.f.
09/02/2013)announced on
29/01/2013

Decreased
from 4.25%
which was
continuing
since

SLR
SLR(statutory Liquidity Ratio) is the amount a
commercial bank needs to maintain in the form of
cash, gold or govt. approved securities (Bonds).

Limit:The minimum value of SLR was fixed

at 20% and the maximum was fixed at 40%.

Present SLR:
Statutory
Liquidity
Ratio
(SLR)

23%(w.e.f.
11/08/2012)
(announced
on
31/07/2012)

Decreased
from 24%
which was
continuing
since
18/12/2010

Continued
- Rate of CRR & SLR is fixed by RBI and it is
changed from time to time , in the light of
economic conditions including inflation.
- This amount is calculated by banks with
reference to their net demand and time
liabilities (the major part being in the form of
deposits).
-This balances is maintained as an average
fortnightly balance, that may fluctuate on
daily basis.

Continued
-At any time, the minimum balances must not
go below the percentage fixed by RBI as
percentage of the average fortnightly balance.
-In case of Default in maintaining CRR & SLR,
there is provision for interest payment by banks
to RBI.
- If RBI decides to increase the percentage of
CRR , then available amount with the banks
come down.
-RBI does not pay any interest to banks for the

Example(CRR):
Amount of net demand & time liabilities =
10000 Cr
Rate of CRR(assumed)
= 4%
Average cash balance to be maintained =
400 Cr
Impact of change in CRR:
-If CRR is Reduced, the cash balances
maintained with RBI would decline(and
liquidity with banks increases ).
Corresponding amount is Increases lending
capacity of banks

Example (SLR):

Amount of net demand & time liabilities = 10000


Cr
Rate of SLR(assumed)
= 23%
Average cash balance to be maintained = 2300
Cr

Impact of change in SLR:

- If SLR is reduced, it changes the fund deployment


pattern.
-The funds freed from such investments, can be
invested by banks for lending purpose, to earn
better returns.
- The returns on such securities are generally
lower than the interest paid on loans, although the

How CRR and SLR


maintained

Thank you..

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