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RBI Plocy Rates : CRR, SLR, Repo Rate & Reverse Repo Rate
What is CRR (Cash Reserve Ratio) & history of CRR changes from year 1992.
Last changed 4.00% on 29/01/2013 w.e.f.09/02/2013
What is SLR (Statutory Liquidity Ratio) & history of SLR changes from year 1949
Last changed 21.50% w.e.f. 07/02/2015 announced on 03.02.15
What is Reverse Repo rate & history of Reverse Repo rate changes from year 2001
Last changed 5.75% on 02/08/2017
What is Repo rate & history of Repo rate changes from year 2002
Last changed 6.00% on 02/08/2017
CRR - The Cash Reserve Ratio
Cash reserve Ratio (CRR) is the amount of Cash(liquid cash like gold) that the banks have to keep with RBI. This Ratio is basically to secure solvency of the bank and to drain out the excessive money from the banks. If RBI decides to increase the percent of this, the available amount with the banks comes down and if RBI reduce the CRR then available amount with Banks increased and they are able to lend more.CRR is governed by the provisions of Section 42 of the Reserve Bank of India Act, 1934.
Reverse Repo Rate is the rate which is paid by RBI to banks on Deposit of funds with RBI.A reduction in the repo rate will help banks to get money at a cheaper rate. When the repo rate increases borrowing from RBI becomes more expensive.To borrow from RBi bank have to submit liquid bonds /Govt Bonds as collateral security,so this facility is a short term gap filling facility and bank does not use this facility to Lend more to their customers.
SLR - Statutory Liquidity Ratio SLR is that proportion of a bank's Net Demand and Time Liabilities (NDTL) that it has to maintain as investments in certain specified assets. SLR is governed by the provisions of Section 24 of the Banking Regulation Act.There is no minimum stipulation on SLR (earlier there used to be a minimum stipulated SLR of 25% - but this was removed with an amendment to the Banking Regulation Act in 2007).
However, SLR can not exceed 40%.
Repo Rate The rate at which the RBI lends money to commercial banks is called repo rate. It is an instrument of monetary policy. Whenever banks have any shortage of funds they can borrow from the RBI