What is CRR and What is SLR?

CRR:
CRR (cash reserve ratio) is the minimum amount of money that should be kept in RBI by a bank.


If the CRR rate increases

• The amount must be kept in RBI by a bank will increase
• The available amount in the bank will decrease
• And so the loan/ money circulation to customers will automatically come down
• Thus inflation will be controlled.

Current CRR in india is 6%

SLR:

SLR (statutory liquidity ratio) is the minimum amount should be kept by a bank in the form of Government bonds, cash reserves and gold.

• SLR avoids the bank from bankrupt (like american banks at 2009)
• It ensures the wealth of the bank as well as the country through the gov bonds
• It controls the inflation

Current SLR in india is 24%