Explainers · Banking & economy

CRR and SLR

The two reserves every bank must keep, and how changing them affects lending.

Step by step

1. First, what is NDTL?

   Net Demand and Time Liabilities: roughly, the deposits a bank holds (savings, current and fixed deposits) after certain adjustments. Both CRR and SLR are worked out as a percentage of NDTL.

2. Cash Reserve Ratio (CRR)

   The share of NDTL a bank must keep as cash with the RBI. The bank earns no interest on it and cannot lend it.

3. Statutory Liquidity Ratio (SLR)

   The share of NDTL a bank must keep with itself in safe, liquid assets: cash, gold or approved government securities. Unlike CRR, government securities under SLR earn interest.

4. Why change them?

   A lower CRR or SLR frees money for banks to lend, which supports growth. A higher ratio pulls money out of the system, which helps control inflation.

5. Recent change

   The RBI cut the CRR from 4% to 3% in four steps between September and November 2025, releasing money for lending.

Current figures (as of 6 November 2026)

• CRR3%
• SLR18%

Exam facts

• CRR legal basisSection 42 of the RBI Act, 1934
• SLR legal basisSection 24 of the Banking Regulation Act, 1949
• CRR kept withThe RBI, as cash
• SLR kept withThe bank itself: cash, gold, government securities
• Interest earnedNone on CRR; yes on SLR government securities
• Calculated onNet Demand and Time Liabilities (NDTL)