Difference between CRR and SLR
Here's a simple and clear explanation of the difference between CRR and SLR, useful for UPSC Mains:Where is it kept? With RBI, With the bank itself
Difference between CRR and SLR - UPSC Notes Difference between CRR and SLR (Easy Explanation for UPSC) Point of Difference CRR (Cash Reserve Ratio) SLR (Statutory Liquidity Ratio) Meaning Percentage of deposits banks keep with RBI in cash form Percentage of deposits banks keep with themselves in the form of cash, gold, or govt. securities Where is it kept? With RBI With the bank itself Form of Reserve Only cash Cash, gold, or approved securities Purpose Maintain liquidity and control lending Ensure liquidity, control inflation and credit growth Returns (Interest) No interest given by RBI Banks can earn interest on securities Controlled by RBI under RBI Act, 1934 RBI under Banking Regulation Act, 1949 Impact on Liquidity Reduces liquidity more directly Reduces lending capacity indirectly Easy Trick to Remember: CRR = Cash with RBI SLR = Securities & Liquids with bank
Why important for UPSC?
CRR and SLR are monetary policy tools used by RBI to control inflation, maintain liquidity, and ensure financial sta…