1.
Presented By
Bhavana B

2.
Limit: The minimum value of CRR was statutorily fixed at
3% and the maximum was fixed at 15%.
Present CRR :
Cash Reserve
Ratio (CRR)
4.00%(w.e.f.
09/02/2013)announced on
29/01/2013
Decreased from
4.25% which was
continuing since
30/10/2012

3.
Limit:The minimum value of SLR was fixed at 20% and
the maximum was fixed at 40%.
Present SLR:
Statutory
Liquidity Ratio
(SLR)
23%(w.e.f.
11/08/2012)
(announced on
31/07/2012)
Decreased from
24% which was
continuing since
18/12/2010

4.
Continued…
- Rate of CRR & SLR is fixed by RBI and it is changed from
time to time , in the light of economic conditions
including inflation.
- This amount is calculated by banks with reference to
their net demand and time liabilities (the major part being
in the form of deposits).
-This balances is maintained as an average fortnightly
balance, that may fluctuate on daily basis.

5.
Continued…
-At any time, the minimum balances must not go below the
percentage fixed by RBI as percentage of the average
fortnightly balance.
-In case of Default in maintaining CRR & SLR, there is
provision for interest payment by banks to RBI.
- If RBI decides to increase the percentage of CRR , then
available amount with the banks come down.
-RBI does not pay any interest to banks for the balances
maintained as CRR . But banks pay interest on the deposit
used for CRR.

6.
Example(CRR):
Amount of net demand & time liabilities = 10000 Cr
Rate of CRR(assumed)
= 4%
Average cash balance to be maintained = 400 Cr
Impact of change in CRR:
-If CRR is Reduced, the cash balances maintained with
RBI would decline(and liquidity with banks increases ).
Corresponding amount is Increases lending capacity of
banks
-The increased lending increases their interest income
and leads to more profits

7.
Example (SLR):
Amount of net demand & time liabilities = 10000 Cr
Rate of SLR(assumed)
= 23%
Average cash balance to be maintained = 2300 Cr
Impact of change in SLR:
- If SLR is reduced, it changes the fund deployment pattern.
-The funds freed from such investments, can be invested by
banks for lending purpose, to earn better returns.
- The returns on such securities are generally lower than the
interest paid on loans, although the risk is negligible in
investing in govt. securities