CRR:

Cash reserve Ratio (CRR) is the amount of funds that the banks have to keep with the RBI. If
the central bank decides to increase the CRR, the available amount with the banks comes
down. The RBI uses the CRR to drain out excessive money from the system.
CRR is a portion of the banks NDTL or deposits that need to be kept in their specified
current accounts maintained with RBI. This money earns no interest. The current CRR level
is 4%. This means that for every Rs.100 of deposit that a bank holds, it keeps aside Rs.4 with
RBI. CRR, which is maintained on a fortnightly basis, is a tool that the central bank uses to
manage money supply and liquidity in the market. Generally, it is increased to reduce the
outstanding liquidity in the system. RBI reduces CRR if it needs to increase the money
supply in the economy.
SLR:
Banks are required to invest a certain percentage of their time and demand deposits in assets
specified by RBI, including gold, and government bonds and securities.Banks usually keep
more than the required SLR, and at present, the actual SLR stands at 29%. RBI wants banks
to hold a part of the money in near cash so that they can meet any unexpected demand from
depositors at short notice by selling the bonds.
In India, historically, banks SLR has been high as they need to bear the burden of the
governments fiscal deficit.
Statutory liquidity ratio (SLR) is the Indian government term for reserve requirement that the
commercial banks in India require to maintain in the form of gold, cash or government
approved securities before providing credit to the customers. Statutory Liquidity Ratio is
determined and maintained by Reserve Bank of India in order to control the expansion of
bank credit.
The SLR is determined by a percentage of total demand and time liabilities. Time Liabilities
refer to the liabilities which the commercial banks are liable to pay to the customers after a
certain period mutually agreed upon, and demand liabilities are such deposits of the
customers which are payable on demand. An example of time liability is a six month fixed
deposit which is not payable on demand but only after six months. An example of demand
liability is a deposit maintained in saving account or current account that is payable on
demand through a withdrawal form such as a cheque.
The SLR is commonly used to control inflation and fuel growth, by increasing or decreasing
it respectively.
SLR is used by bankers and indicates the minimum percentage of deposits that the bank has
to maintain in form of gold, cash or other approved securities. Thus, we can say that it is ratio
of cash and some other approved liability (deposits). It regulates the credit growth in India.
The liabilities that the banks are liable to pay within one month's time, due to completion of
maturity period, are also considered as time liabilities. The maximum limit of SLR is 40%
and minimum limit of SLR is 0 In India, Reserve Bank of India always determines the
percentage of SLR.
Used to control the expansion of bank credit. By changing the level of SLR, the Reserve
Bank of India can increase or decrease bank credit expansion.
The RBI can increase the SLR to contain inflation, suck liquidity in the market, to tighten the
measure to safeguard the customers money.

Difference:
The important difference between CRR and SLR is that CRR has to be maintained in cash
while SLR can be maintained either in cash or in assets that RBI suggests. Banks dont earn
any returns from the money parked in the form of CRR. However, banks can earn returns
from SLR.
CRR controls liquidity in banking system while SLR regulates credit growth in the country.
The other difference is that to meet SLR, banks can use cash, gold or approved securities
whereas with CRR it has to be only cash. CRR is maintained in cash form with central bank,
whereas SLR is money deposited in govt. securities. CRR is used to control inflation.