CRR and SLR are monetary policy tools used by central banks to manage the money supply and control inflation. Both CRR and SLR are applicable in India and are used by the Reserve Bank of India (RBI) to regulate the banking system.
CRR stands for Cash Reserve Ratio, which is the percentage of a bank's total deposits that it must hold as cash with the RBI. This is a mandatory reserve that banks must maintain to ensure that they have enough cash on hand to meet their customers' demands for withdrawals.
SLR stands for Statutory Liquidity Ratio, which is the percentage of a bank's total deposits that it must hold in the form of government securities. This is also a mandatory reserve that banks must maintain to ensure that they have enough liquid assets to meet their customers' demands for withdrawals. The SLR is also set by the RBI and is used to control the amount of money in circulation in the economy.
Also Read- Which was the first ever private bank in the world?