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  2. CRR and SLR are regulatory measures used by the RBI to manage liquidity in the economy. This ensures the stability and solvency of the banking sector. Both ratios directly impact the banking sector as they determine the amount of funds that banks have to keep aside either as cash (CRR) or in the form of liquid assets (SLR).
    www.shiksha.com/online-courses/articles/understa…
    SLR and CRR help maintain liquidity in the bank, and RBI uses these tools as their monetary policy to control inflation.
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    Statutory reserves include the CRR and the Statutory liquidity ratio (SLR). The CRR is maintained with the RBI to ensure that banks have sufficient liquidity in order to handle any rush of bank withdrawals and is more of a safety measure.
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    CRR and SLR have to be maintained by the Banks on a daily basis as a percentage of Net Demand and Time Liabilities (NDTL), on the last Friday of the second preceding fortnight. Failure on maintaining CRR and SLR may lead to Penalties, which can be: Bank Rate + 3% on shortfall Bank Rate + 5% on subsequent default days.
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