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Question
Distinguish between:
Cash Reserve Ratio and Statutory Liquidity Ratio
Solution
| Basis | Cash Reserve Ratio | Statutory Liquidity Ratio |
| Meaning | It is the minimum amount of funds that a commercial bank has to maintain with the Reserve Bank of India in the form of deposits. | It is the minimum percentage of assets, such as gold, cash or securities, which must be maintained by the commercial banks with the Central Bank. |
| Affect | It affects the bank's capacity to lend. | It affects the bank’s liquidity. |
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