Presentation on

CRR,Bank Rates and SLR (1998-2000)

By – Deepak tiwari & varyaniAyush agrawal

Darshika Ashish mishra

Anil patidar

Present banking system is called a “fractional reserve banking system”,

The Cash Reserve Ratio (CRR) refers to this liquid cash that banks have to maintain with the Reserve Bank of India (RBI) as a certain percentage of their demand and time liabilities.

When the RBI feels that the money supply is increasing and causing an upward pressure on inflation, the RBI has the option of increasing the CRR thereby reducing the deposits available with banks to make loans and hence reducing the money supply and inflation

CRR

Statutory Liquidity Ratio is the amount of liquid assets, such as cash, precious metals or other approved securities, that a financial institution must maintain as reserves other than the Cash with the Central Bank

Bank rate, also referred to as the discount rate, is the rate of interest which a Central bank charges on the loans and advances that it extends to commercial banks and other financial intermediaries. Changes in the bank rate are often used by central banks to control the money supply.

SLR

BANK RATE

SLR restricts the bank’s leverage in pumping more money into the economy. On the other hand, CRR, or Cash Reserve Ratio, is the portion of deposits that the banks have to maintain with the Central Bank.The other difference is that to meet SLR, banks can use cash, gold or approved securities whereas with CRR it has to be only cash. CRR is maintained in cash form with central bank, whereas SLR is maintained in liquid form with banks themselves.

Bank Rate fluctuation (1998-2000)

date bank rate (in%)17-Jan-98 11

19-Mar-98 10.503-Apr-98 1029-Apr-98 902-Mar-99 802-Apr-00 702-Jul-00 8

1

3

5

7

9

11 1110.510

98

78

bank rate (in%)

Axis Title

17-1-98

28-3-98

November

4, 1998

29-8-98

13-3-99

August

5, 1999

June 11, 1

999

20-11-99

August

4, 2000

22-4-2000

29-7-2000

December

8, 2000

0

2

4

6

8

10

12

10.510.25

10

1110.5

109.5

98.5

88.25 8.25

CRR (in %)

CRR (in %)