CRR

Cash Reserve Ratio is a specified minimum fraction of the total

deposits of customers, which commercial banks have to hold
asreserves with the central bank.
The amount specified as the CRR is held in cash and cash
equivalents, is stored in bank vaults or parked with the Reserve
Bank of India. The aim here is to ensure that banks do not run out
of cash to meet the payment demands of their depositors. CRR is
a crucial monetary policy tool and is used for controlling money
supply in an economy.

Bank Rate 8.50% (w.e.f. 04/03/2015) Decreased

from 8.75% which was continuing since 15/01/2015

Cash Reserve Ratio (CRR) 4.00% (wef 09/02/2013) announced on 29/01/2013 Decreased from 4.25%which
was continuing since 30/10/2012

Statutory Liquidity Ratio (SLR) 21.50%(w.e.f.

07/02/2015)(announced on 03/02/2015) Decreased
from 22.00% which was continuing since 09/08/2014

Statutory liquidity ratio (SLR) is the Indian government term

for reserve requirement that the commercial banks in India require
to maintain in the form of gold, cash or government
approved securities before providing credit to the customers.
Statutory Liquidity Ratio is determined and maintained
by Reserve Bank of India in order to control the expansion of
bank credit.
The SLR is determined by a percentage of total demand and time
liabilities. Time Liabilities refer to the liabilities which the
commercial banks are liable to pay to the customers after a
certain period mutually agreed upon, and demand liabilities are
such deposits of the customers which are payable on demand.

The SLR is commonly used to control inflation and fuel growth, by

increasing or decreasing it respectively. This counter acts by
decreasing or increasing the money supply in the system
respectively. Indian banks holdings of government securities are
now close to the statutory minimum that banks are required to
hold to comply with existing regulation. When measured in
rupees, such holdings decreased for the first time in a little less
than 40 years (since the nationalisation of banks in 1969) in
200506.

Repo
Repo rate is the rate at which the central bank of a country (RBI in
case of India) lends money to commercial banks in the event of
any shortfall of funds.
Definition: Repo rate is the rate at which the central bank of a
country (Reserve Bank of India in case of India) lends money to
commercial banks in the event of any shortfall of funds. Repo rate
is used by monetary authorities to control inflation.
Description: In the event of inflation, central banks increase repo
rate as this acts as a disincentive for banks to borrow from the
central bank. This ultimately reduces the money supply in the
economy and thus helps in arresting inflation.

SLR
Every bank in India has to maintain at the close of business every
day, a minimum proportion of their net demand and time liabilities
as liquid assets in the form of cash, gold and un-encumbered
approved securities. The ratio of liquid assets to demand and time
liabilities is known as Statutory Liquidity Ratio (SLR).
In simple words, it is the percentage of total deposits banks have
to invest in government bonds and other approved securities. A
SLR bond also qualifies for the portfolio maintained by banks to
meet the liquidity requirement. RBI in November cut the SLR for
banks by one percentage point and it now stands at 24%

Repo Rate 7.50% (w.e.f. 04/03/2015) Decreased from

7.75% which was continuing since 15/01/2015

Reverse Repo Rate 6.50% (w.e.f. 04/03/2015)

Decreased from 7.00% which was continuing since
15/01/2015

Reverse repo
Reverse repo rate is the rate at which the central bank of a
country (RBI in case of India) borrows money from commercial
banks within the country.
Definition: Reverse repo rate is the rate at which the central bank
of a country (Reserve Bank of India in case of India) borrows
money from commercial banks within the country. It is a monetary
policy instrument which can be used to control the money supply
in the country.
Description: An increase in the reverse repo rate will decrease
the money supply and vice-versa, other things remaining
constant. An increase in reverse repo rate means that commercial

banks will get more incentives to park their funds with the RBI,
thereby decreasing the supply of money in the market.