There is need to bring down the Cash Reserve Ratio and Statutory Liquidity Ratio in a calibrated manner so that banks will have more money to lend as credit, said Dr D. Subbarao, Governor, Reserve Bank of India.
CRR is the portion of deposits that banks have to keep as cash with the RBI and is currently at six per cent. SLR is the percentage of deposits that banks have to invest in Government securities and is currently at 24 per cent. While CRR and SLR cannot be done away with, the thinking within the RBI is that both the reserve ratios are high and they must be reduced in a calibarated manner. It is SLR which has protected Indian banks from the global financial crisis.
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