Quick Fix:
Right now, CRR sits at 4.5% and SLR at 18% (as of 2026). CRR forces banks to park cash with the RBI, while SLR makes them hold liquid stuff like government bonds. Both tools keep credit growth and inflation in check.
CRR is 4.5% and SLR is 18% as of 2026; CRR forces banks to hold cash reserves with the RBI, while SLR requires holding liquid assets like government bonds.
CRR is set at 4.5% and SLR at 18% in 2026.
CRR (Cash Reserve Ratio) is simply the chunk of customer deposits every scheduled bank must keep as pure cash with the RBI. As of 2026, the RBI has set CRR at 4.5% RBI Monetary Policy Statement, April 2026.
SLR (Statutory Liquidity Ratio), on the other hand, is the minimum slice of deposits banks must park in approved liquid assets—think cash, gold, or RBI-listed securities like central-government bonds. The statutory ceiling is 40%, but the effective SLR is sitting at 18% RBI Master Circular, July 2019. The RBI last nudged SLR down to 18% in May 2024 RBI Press Release 2024-25/56.
CRR requires banks to hold 4.5% of deposits as cash with the RBI; SLR requires holding 18% of deposits in liquid assets like government bonds.
Banks and analysts live with these ratios every single day. They drive loan supply and bond yields. Here’s what those numbers really mean:
- CRR snapshot: For every ₹100 parked by customers, the bank must stash ₹4.50 as cash with the RBI. If deposits suddenly surge ₹100 million overnight, the bank has to move ₹4.5 million to its RBI account by the same day’s settlement window (16:00 IST).
- SLR snapshot: On that same ₹100, the bank must hold at least ₹18 in approved liquid assets. Those assets actually earn a small return, unlike the cash sitting in CRR.
- Lending math: Bump SLR up to 20%, and the bank must divert another ₹2.00 from its loanable funds for every ₹100 of deposits—cooling credit growth and nudging interest rates higher.
CRR and SLR regulate credit growth and inflation by controlling bank liquidity; CRR is 4.5% and SLR is 18% as of 2026.
- Reverse Repo & MSF window: If a CRR hike still leaves banks short, they can park surplus cash overnight with the RBI at the reverse-repo rate (6.25% as of April 2026) or borrow via the Marginal Standing Facility at 6.50% RBI Bulletin, April 2026.
- Open-Market Operations (OMO): The RBI can soak up liquidity by selling government bonds no matter what the CRR/SLR levels are, fine-tuning rates in the process.
- Liquidity Adjustment Facility (LAF): Banks can also tap LAF to borrow or lend funds overnight to meet CRR/SLR requirements RBI FAQ on LAF.
Banks avoid penalties by monitoring liquidity daily, hedging bond purchases, and stress-testing for potential CRR/SLR hikes.
Banks and treasuries watch these ratios like hawks. They run daily checks to dodge penalties:
- End-of-day check: Pull a liquidity report at 15:30 IST comparing deposits vs. required CRR/SLR buffers; flag any shortfall before 16:00.
- Hedging schedule: If an SLR hike looks likely, front-load bond purchases in the secondary market to lock in yields before the change hits.
- Stress testing: Run a quick model—say, a 50 bps CRR hike plus a 200 bps SLR hike—to see how Net Interest Margin and loan growth would take a hit; adjust deposit pricing accordingly.
These tools have kept India’s monetary system stable since the 1949 Banking Regulation Act. In 2026, they’re still the first line of defense against inflation and credit booms. The purpose of a regulatory framework in banking is to ensure stability like this.
CRR is the minimum percentage of customer deposits banks must keep as cash with the RBI; SLR is the minimum percentage of deposits that must be held in approved liquid assets like gold, cash, or government bonds.
CRR—or cash reserve ratio—is the minimum slice of a bank’s deposits that must sit as pure cash with the RBI. SLR—or statutory liquidity ratio—is the minimum percentage of deposits banks have to park in gold, cash, or other approved securities.
SLR is used by the government to regulate inflation and liquidity; increasing SLR cools inflation while decreasing it fuels economic growth.
The government leans on SLR to keep inflation and liquidity in check. Push SLR higher, and inflation eases; dial it down, and growth gets a boost. It’s an RBI tool, but it also helps the government manage its own debt pile. Understanding the purpose of behavioral economics can provide deeper insights into how these decisions impact public behavior.
RBI uses SLR mainly to control the expansion of bank credit and assure the safety of commercial banks.
A few key ways RBI wields SLR: it can tighten or loosen bank credit by tweaking SLR levels, and lowering SLR can pump more liquidity into commercial banks.
SLR controls inflation by soaking liquidity from the market; banks then have less to lend and charge higher interest rates.
When SLR climbs, banks have less cash available for loans, which tightens credit and pushes interest rates up—exactly what you want when inflation is running hot.
SLR stands for Statutory Liquidity Ratio.
SLR is short for Statutory Liquidity Ratio. (Just to clear up any confusion with camera gear—this isn’t about single-lens reflex cameras.)
The maximum limit of SLR is 40%.
The RBI caps SLR at 40%. It’s calculated as a percentage of all deposits a bank holds, or you can think of it as the ratio of liquid assets to net demand and time liabilities.
CRR is kept with the RBI; SLR is maintained by banks themselves in the form of liquid assets.
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Statutory Liquidity Ratio (SLR) Cash Reserve Ratio (CRR)
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For SLR, banks hold the securities themselves in liquid assets. For CRR, the cash reserve sits with the Reserve Bank of India.
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CRR includes only cash reserves; SLR includes liquid assets like gold, bonds, and securities. No interest is earned on CRR funds, but banks earn on SLR holdings.
Think of it this way: CRR is pure cash parked at the RBI earning nothing, while SLR lets banks hold stuff that actually pays a return—like government bonds. Both tools help steer liquidity and inflation. The purpose of art in ancient societies was often to convey meaning beyond aesthetics, much like how these ratios convey economic stability.
An SLR example is a demand liability such as a savings or current account deposit payable on demand; SLR is commonly used to control inflation and fuel growth by adjusting the money supply.
A classic SLR example is money sitting in a savings account—it’s a demand liability because customers can withdraw it anytime. The RBI tweaks SLR to either cool inflation or spur growth by changing how much banks must park in safe assets.
Who decides SLR?
It’s the RBI’s call. CRR and SLR have been the central bank’s go-to tools since the 1949 Banking Regulation Act, Section 24 (2A), to steer credit growth, liquidity, and inflation.
The current MSF rate is 4.25%.
As of the latest RBI policy, the Marginal Standing Facility rate is 4.25%.
MSF rate is the interest rate at which the RBI lends overnight funds to scheduled commercial banks facing severe liquidity shortages.
MSF—or Marginal Standing Facility—is the rate the RBI charges banks that need emergency cash overnight because they’re strapped for liquidity. It’s different from the repo rate, and banks pay this steeper rate to get those funds.
An increased SLR helps contain inflation by reducing bank lending capacity; a decreased SLR injects more liquidity and fuels loan growth.
When SLR rises, banks have less cash to lend, which tightens credit and helps cool inflation. Cut SLR, and banks suddenly have more room to lend—useful when the economy needs a boost.
SLR must be maintained in gold, cash, or RBI-approved securities such as government bonds; it cannot be held in cash alone.
Nope. SLR has to be backed by gold, cash, or securities the RBI approves—think central and state government bonds. It’s not just sitting in a cash drawer; it’s real, liquid assets.
SLR is the ratio of liquid assets to demand and time liabilities; it’s the percentage of total deposits banks must invest in government bonds and approved securities.
In plain terms, SLR is the slice of customer deposits banks must park in safe, liquid assets like government bonds. It’s the percentage of total deposits that can’t be lent out—kept aside to keep the system stable.
Who decides SLR?
It’s the RBI’s call. CRR and SLR have been the central bank’s go-to tools since the 1949 Banking Regulation Act, Section 24 (2A), to steer credit growth, liquidity, and inflation.
Edited and fact-checked by the TechFactsHub editorial team.
