Bhupendra Pt Singh Imrt B School Lucknow Crr

WHAT IS CRR,SLR,RR,RRR?

What is CRR? According to RBI ACT 1935, every commercial bank has to keep certain minimum cash reserve with the RBI. The RBI empowered to determine CRR for the commercial bank in

ROLE OF CRR CRR quite often used to control inflation. An increase in CRR reduces the cash with commercial bank which result in low supply of currency in the market

What Is SLR? SLR (Statutory Liquidity Ratio):- under the

section 24 of the banking act, 1949, commercial banks have to maintain liquid assets in the form of cash, gold and unencumbered approved securities equal to not less than 25% of their total demand and time deposits liabilities. This is known as statutory liquidity reserve

How is SLR determined? SLR is determined as the percentage of total demand

and percentage of time liabilities. Time Liabilities are the liabilities a commercial bank liable to pay to the customers on their anytime demand.

There are three objectives of the SLR To restrict expansion of bank credit. To augment bank’s investment in government

securities To ensure solvency of banks

What is REPO? A REPO is purchase of a one loan against the sale of another. Under such an agreement, the seller sells specified securities with an agreement to purchase the same at a mutually decided future date and price. Simi The transaction is called a REPO when viewed from the perspective of the seller of the securities. REPOs are the part of open market operations undertaken to influence short term liquidity.

What is REVERSE REPO? A p u r c h a s e o f s e c u r i t i e s w i t h a n

agreement to resell them at a higher price at a specific future date. This is essentially just a loan of the security at a specific rate also called r e v e r s e r e p u r c h a s e a g r e e m e n t. T h e t r a n s a c t i o n i s c a l l e d a R E V E R S E REPO when viewed from the perspective of the buyer of the securities.

THANK YOU