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S
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tatuary
liquidity ratio: The SLR refers to the amount which the banks
has to maintain with them in form o gold or approved govt. securities before
providing credit to the customers.
Here
approved securities means shares & debentures of different companies.
Or
Statuary
liquidity ratio means the amount of liquid assets such as precious metals
(gold) or other approved securities that a financial institution must maintain
as reserves other than cash.
Objectives
of SLR is to restrict expansion of the bank credit:
1.
To
increase investment of banks in govt. securities.
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C
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2.
To
ensure solvency of banks.
ash
reserve ratio (CRR):
CRR refers to the funds that the banks have to keep with the RBI. If the
central banks decide to increase the CRR, the available amount with the banks
comes down.
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R
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The RBI
uses the CRR to drain out the excessive money from the system.
epo
rate: repo rate
is the rate at which the central bank (RBI) lends the money to the commercial
banks to meet the minimum statuary requirement of the day. Repo rate is charged
on money lend by central banks to commercial banks for short term purposes.
A
Reduction in repo rate helps the banks to get the funds at a lower rate from
RBI.
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R
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Repo
rate in INDIA = Discount rate in US.
everse
repo rate: Reverse
repo rate is the rate at which the commercial bank lends the money to the
central bank (RBI). Banks are always happy to lend money to the RBI since their
money is in safe & secure hands.
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B
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It is
also a tool used by the RBI to drain out the excess money out of the Banking
System.
ank
rate: Bank Rate
refers to the rate which the central bank charges on the loans & advances
to the commercial banks. Whenever the banks ha shortage of funds, they can
typically borrow from the central banks based on the monetary policy of the
country.
Current
rates (F.Y. 2013-2014):
SLR : 23%
CRR: 4% (w.e.f. 09/02/2013)
REPO RATE: 7.75%
REVERSE REPO RATE: 6.75%
BANK RATE: 8.75%
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