What are the components of LRR?
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The two components of Legal Reserve Ratio are:
(i) Cash Reserve Ratio (CRR) It refers to the minimum percentage of a bank's total deposits required to be kept with the Central Bank. Commercial banks have to keep with the Central Bank, a certain percentage of their deposits in the form of cash reserves as a matter of law.
(ii) Statutory Liquidity Ratio (SLR) Every bank is required to maintain a fixed percentage of its assets in the form of cash or other liquid assets, called SLR with itself. The major components of liquid assets are cash in hand, reserves with the RBI and government and other approved securities.
(i) Cash Reserve Ratio (CRR) It refers to the minimum percentage of a bank's total deposits required to be kept with the Central Bank. Commercial banks have to keep with the Central Bank, a certain percentage of their deposits in the form of cash reserves as a matter of law.
(ii) Statutory Liquidity Ratio (SLR) Every bank is required to maintain a fixed percentage of its assets in the form of cash or other liquid assets, called SLR with itself. The major components of liquid assets are cash in hand, reserves with the RBI and government and other approved securities.
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