Q. 94.5( 2 Votes )

Define SLR and CR

Answer :

SLR is the Statutory liquidity ratio which is the fixed percentage of assets in the form of cash or other liquid assets, required to be kept by every commercial bank.

Cash Reserve Ratio or CRR is the minimum deposit of cash held by the commercial banks with the central bank. The RBI fixes the CRR and often fluctuates it according to tot he needs of the economy. An increase in the CRR reduces the amount of excess cash held by the bank which in turn reduces the availability of credit giving to the public. Similarly, a decrease in CRR increases the amount of excess cash held by the bank which increases the credit-extending capacity to the public.

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