Monetary Policy Tools: Repo, RR, SLR and CRR Repo (Reserve Requirement Ratio): The repo rate is the percentage of deposits that banks are required to ho...
Monetary Policy Tools: Repo, RR, SLR and CRR
Repo (Reserve Requirement Ratio):
The repo rate is the percentage of deposits that banks are required to hold in reserve. When a bank needs to borrow money, it can borrow from other banks at the repo rate. When the repo rate is increased, banks are required to hold a higher percentage of their deposits in reserve, which can slow down lending and reduce inflation.
RR (Repos Rate):
The repo rate is the interest rate at which banks lend to each other. When the repo rate is increased, banks are willing to lend more at a higher interest rate, which can stimulate lending and economic growth.
SLR (Short-Term Liquidity Ratio):
The SLR is the percentage of a bank's deposits that banks are required to hold in liquid assets such as overnight repurchase agreements (repos). When a bank has a high SLR, it is more liquid and can borrow and lend money quickly and easily.
CRR (Cash Reserve Ratio):
The CRR is the percentage of a bank's deposits that banks are required to hold in cash. When the CRR is increased, banks are required to hold a higher percentage of their deposits in cash, which can reduce the availability of credit