RESERVE BANK OF INDIA

CREDIT POLICY

Methods of credit control

Methods of credit control Statutory Liquidity Requirement

Cash Reserve ratio

Refinancing policy

Informal measures

Bank rate

Lending policy

CASH RESERVE REQUIREMENT

The cash reserve ratio stipulates the minimum proportion of deposits that banks must hold with the central bank. CRR has to be maintained by all scheduled banks

Statutory Liquidity Requirement

Statutory liquidity ratio defines the minimum proportion of their deposits that banks have to maintain at the close of business every day as liquid assets, such as cash gold and investment. Acq to sec 11(2) of banking regulation act, Gold has to be valued at current market price investment means treasury bills, govt securities and any other instrument issued by rbi

Informal Measures

KEY POINTS FOR CREDIT POLICY

Bank rate is the rate at which RBI lends to commercial banks. This influences the interest rates commercial banks charge their customers.

 Statutory liquidity ratio defines the minimum proportion of their deposits that banks have to maintain at the close of business every day as liquid assets, such as cash or gold. Repo rate is the rate the central bank charges to lend to banks against securities. Reverse repo rate is the rate at which the RBI borrows money from banks

Current rates
RATES
CRR REPO RATE
REVERSE REPO BANK RATE SLR Q2 Q1

4.25 8
7 9 23

4.5 8
7 9 24

What happens if they are decreased

CRR is decreased there is an inflow of cash in the market which in turn implies that banks have more money to give loans SLR is decreased then also banks can give loans