CRR and SLR: the reserve ratios
Two rules that make banks set aside part of their deposits, which limits how much they can lend.
What the paper can ask
- CRR is fixed under Section 42(1) of the Reserve Bank of India Act 1934 as a percentage of NDTL; demand liabilities are payable on demand, time liabilities otherwise.
- SLR is also a percentage of demand and time liabilities; the statutory ceiling is 40 percent and the floor 0 percent since the 2017 amendment of the Banking Regulation Act.
- SLR has stood at 18 percent since 11 April 2020. (as of 15 Oct 2026)
- On 6 June 2025 the RBI cut CRR by 100 basis points in four tranches of 25 (6 September, 4 October, 1 November, 29 November 2025) to 3 percent, releasing about Rs 2.5 lakh crore. (as of 23 Oct 2026)
Latest
CRR is held as cash balances with the RBI. SLR is held by the bank itself in liquid assets: cash, gold or approved government securities. RBI's rates page of 15 October 2026 shows CRR 3 percent and SLR 18 percent.
Why exams ask
Setters ask what each ratio must be held in and where, the Act behind each, the current rates, and which ratio the RBI changes to manage liquidity.
The full story
The RBI controls how much banks can lend by fixing two ratios on their net demand and time liabilities (NDTL), roughly their deposits. They are the Cash Reserve Ratio (CRR) and the Statutory Liquidity Ratio (SLR). Each says how big a slice of NDTL a bank must set aside, and in what form. Raising either ratio soaks up money; cutting it releases lending power.
Test yourself
1.The Cash Reserve Ratio (CRR) is the share of a bank's net demand and time liabilities that must be kept:
Correct. CRR is the percentage of deposits (NDTL) banks must hold as cash with the RBI. It earns no interest and is a direct liquidity tool.
Not quite. CRR is the percentage of deposits (NDTL) banks must hold as cash with the RBI. It earns no interest and is a direct liquidity tool. It goes into your error book.
2.The Statutory Liquidity Ratio (SLR) requires banks to hold a share of deposits in:
Correct. SLR is the minimum share of NDTL banks keep in approved liquid assets (mainly government securities, gold, cash) with themselves, unlike CRR which is with RBI.
Not quite. SLR is the minimum share of NDTL banks keep in approved liquid assets (mainly government securities, gold, cash) with themselves, unlike CRR which is with RBI. It goes into your error book.