What are CRR & SLR?
Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) are mandatory reserve requirements mandated by the Reserve Bank of India (RBI) for all commercial banks in India.
Key Differences
| Metric | Cash Reserve Ratio (CRR) | Statutory Liquidity Ratio (SLR) |
|---|---|---|
| Definition | Percentage of bank deposits held as cash with RBI. | Percentage of bank deposits held in liquid assets (G-Secs, Gold, Cash). |
| Interest Earned | 0% (RBI pays no interest on CRR). | Banks earn interest from G-Sec holdings. |
| Purpose | Controls money supply and liquidity in banking. | Ensures bank solvency and funds government borrowing. |
| Typical Level | ~4.5% | ~18.0% |
These ratios ensure commercial banks maintain adequate reserves to protect depositors against bank runs.