Comparative analysis of lending performance of five commercial bank with reference to CRR and SLR
Answers
Explanation:
In table 1 and 2, it is evident that a change in the CRR and SLR affects the advances made by the commercial banks. During the fiscal 2008-09, the reduction in CRR from 9% to 5% and that of SLR from 25% to 24% has facilitated an increase in lending performance of all the five commercial banks. For instance, the State Bank of India has been able to advance Rs 5, 42,503 crore from the previous fiscal amount of Rs 4, 16,768. A 30% increase in its rate of advancing credit to different sectors. Therefore, we can arrive at a conclusion that the decrease in CRR and SLR for attaining expansionary monetary policy by the Central bank will lead to increase in the rate of advances made by the commercial banks.
What is also very interesting to observe from the findings presented in the above tables is that, there has been a decreasing trend in the rate of CRR and SLR in India over the past six years. The affect of this decreasing trend is that these commercial banks are able to make increased advances in the economy.