1.

 Explain the components of Legal Reserve Ratio. 

Answer»

Legal reserve ratio is legally compulsory for the banks to keep a certain minimum ratio of deposits as cash. 

It has two components:-

(a) Cash Reserve Ratio (CRR) – A part of total deposits of commercial bank is kept with central bank which is called as Cash Reserve Ratio. 

(b) Statutory Liquidity Ratio (SLR)- Another part of total deposits of commercial bank is kept by bank itself in cash is Statutory Liquidity ratio. 



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