Question 22 of 37
Q.Distinguish between CRR and SLR.
Tamil Nadu DgeTamil Nadu HSC (DGE) Commerce Board 2023Subjective· 2mImportance★★★★★
59% · 22/37 Questions
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Start your 14-day free trial to unlock the full solution →CRR = share of deposits kept as cash with the RBI; SLR = share of deposits kept by the bank itself in liquid assets (cash, gold, approved securities). Both control the credit-creating capacity of banks.
| Basis | CRR (Cash Reserve Ratio) | SLR (Statutory Liquidity Ratio) |
|---|---|---|
| Meaning | Percentage of net demand and time liabilities (NDTL) kept as cash reserves with the RBI | Percentage of NDTL maintained by the bank itself in liquid assets |
| Form of reserve | Only cash, with the RBI | Cash, gold and approved government/other securities, held by the bank |
| Held with | The Reserve Bank of India | The commercial bank itself |
| Earning | No interest is earned on CRR balances | Banks earn a return on the securities held |
| Purpose | Controls the liquidity and lending capacity of banks | Ensures solvency of banks and channels funds to government securities |
| … |
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