Both CRR (Cash Reserve Ratio) and SLR (Statutory Liquidity Ratio - mandated
investments in government securities) are instruments in the hands of Reserve
Bank of India (RBI) to regulate money supply in the hands of banks that they
can pump in economy
SLR restricts the bank’s leverage in pumping more money into the
economy. On the other hand, CRR, is the portion of deposits that the banks have
to maintain with the Central Bank RBI to reduce liquidity in banking system.
Thus CRR controls liquidity in banking system while SLR regulates credit growth
in the country.
The other difference is that to meet SLR, banks can use cash, gold or
approved securities whereas with CRR it has to be only cash. CRR is maintained
in cash form with central bank, whereas SLR is money deposited in govt.
securities. CRR is used to control inflation.
From Wikipedia
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