Question

2. SLR is lower than CRR A. True B. Partially true C. False D. None of the above

Answer 1

Answer:

The key distinction between CRR and SLR is that the former must be kept in cash, but the latter may be maintained in either cash or assets that the RBI recommends.

Explanation:

Step 1:A higher SLR will aid in reducing inflation, whereas a lower SLR will support economic expansion. The Banking Regulation Act of 1949 specifies SLR. It aids in sustaining and monitoring the viability of commercial banks.

Step 2:The CRR is a reserve that banks keep with the RBI. It is a portion of bank deposits that are kept in cash. SLR is a required reserve that commercial banks are required to keep on hand. It represents a portion of the net demand and time obligations of commercial banks that are kept as authorised securities.

Step 3:A bank's ability to lend more money is increased when the reserve requirement is reduced. The key distinction between CRR and SLR is that the former must be kept in cash, but the latter may be maintained in either cash or assets that the RBI recommends. The money that banks store in the form of CRR yields no returns to them.

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