BRIEF DESCRIPTION OF SLR, CSR,RR, REPO RATE

1. S.Bharathi
B.S ABM
Aman Sharma
Dept. of Business Administration .NIT,KKR

2. Fiscal Policy:
It is the budgetary stance of Central Govt. decision to decide the
taxation rate (Income) and expenditure policy for a Financial year.
Generally, it is formulated annually.
Monetary Policy:
It is the Central Govt. policy w.r.t. the quantity of money in the
economy, the rate of interest & the exchange rate executed through
Central Bank as RBI in India. Monetary Policy is changed
Monetary Policy

3. Monetary Policy 3

4. • Maintaining price stability
• Ensuring adequate flow of credit to the
productive Sectors of the economy to support
economic growth
• Rapid economic growth
• Full employment
• Equal income distribution

5. Methods to achieve objectives
These methods can be categorized as:
– General/ quantitative methods
– Selective/ qualitative methods

6. Monetary Policy 6
Money Control in an Economy
Qualitative Control :
Through this measure Central Govt notifies priority sectors for
lending. Ex. – Agri Sector, Small Scale Industries &
Handloom Sector etc.
Quantitative Control :
Through this measure Central Bank decides various
rates to control flow of money in economy. These are
generally used as means of inflation control.

7. • CASH RESERVE RATIOCRR
• STATUTORY LIQUIDITY RATIOSLR
• BANK RATEB R
R R
RRR
MSF
BA
• REPO RATE
REVERSE REPO RATE
MARGINAL STANDING FACILITY
BASE RATE
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8.  CRR is the ratio of Bank’s total NDTL (Net Demand &
Time Liabilities)with the RBI in the form of cash
reserves.
 This was fixed to be in the range of 3% to 15% (1956).
 A recent Amendment (2007) has removed the 3
percent floor and provided a free hand to the RBI in
fixing the CRR.
An increase in CRR sucks the amount from the economy
while a decrease injects the amount into the economy.
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9. SLR is the ratio of Bank’s total NDTL (Net Demand & Time
Liabilities) in the form of cash reserves, Gold,
Unencumbered securities. This must be kept by the bank.
 This was fixed to be in the range of 20% to 25% .
At present it is 21.5 %
SLR = (Liquid Assets/NDTL)*100
An increase in SLR sucks the amount from the economy
while a decrease injects the amount into the economy.
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10. The interest rate which the RBI charges on its
long- term lending is known as the Bank Rate.
The clients who borrow through this route are the
GOI, state govt., bank, financial institution, co-operative
bank, NBFCs,etc.
The rate has direct impact on the lending activities of
the concern lending bodies operating in the Indian
financial system.
Currently, Bank Rate is 7.75 %.
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11. The interest rate which the RBI charges from
Commercial Banks on its short -term lendings to them is
known as the Repo Rate.
At present it is 6.75 % .
The concept of REPO RATE was introduced in December
1992.
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12. It is the rate of interest at which RBI pays to its clients who offer
short term deposits to it.
 At present the rate is 5.75%.
It is the reverse of the repo rate & this concept was introduced in
12 November 1996 by the RBI.
Use of this tool :- This tool is utilized by the RBI in the wake of over
money supply with the Indian bank .
It has emerged as very important tool in the direction of following
cheap interest regime- the general policy of the RBI since reform
process started.
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13. Thank U
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