Distinguish between:
4. Cash Reserve Ratio and Statutory Liquidity Ratio
Basis
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Cash Reserve Ratio
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Statutory Liquidity Ratio
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Meaning
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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.
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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.
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Affect
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It affects the bank's capacity to lend.
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It affects the bank's liquidity.
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