Meaning Of Crr & Slr

Meaning of CRR & SLR  CRR, or cash reserve ratio, refers to a

portion of deposits (as cash) which banks have to keep/maintain with the RBI. This serves two purposes. It ensures that a portion of bank deposits is totally risk-free secondly it enables that RBI control liquidity in the system, and thereby, inflation.  Banks are required to invest a portion of their deposits in government securities as a part of their

Impact does a cut in CRR on interest rates  From time to time, RBI prescribes a

CRR or the minimum amount of cash that banks have to maintain with it. The CRR is fixed as a percentage of total deposits. As more money chases the same number of borrowers, interest rates come down.

Change in SLR & gilts products impact interest  For the purpose of determining the rates?

interest rates, it is not the SLR requirement that is important but the size of the government's borrowing programme. As government borrowing increases, interest rates, too, rise.  gilts also provide another tool for the RBI to manage interest rates. The RBI conducts open market operations (OMO) by offering to buy or sell gilts. If it feels interest rates are too high, it may bring them down by offering to buy securities at a lower yield than

How does the Monetary Policy affect the domestic industry and exporters in particular?  Exporters look forward to the monetary

policy since the central bank always makes an announcement on export refinance, or the rate at which the RBI will lend to banks which have advanced pre-shipment credit to exporters.  A lowering of these rates would mean

lower borrowing costs for the exporter