Banking Reforms Since 1991


 
 
Concept Explanation
 

Banking Reforms Since 1991

Banking Reforms Since 1991 :

 Let us get acquainted with some of the important reforms in the banking sector in India.

  • Reduced CRR and SLR: The Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) have been gradually reduced during the economic reforms period in India. By law, in India, the CRR remains between 3-15% of the net demand and time liabilities. It is reduced from the earlier high level of 15% plus incremental CRR of 10% to current 4% level. Similarly, the SLR is also reduced from earlier 38.5% to current minimum of 25% level. This has left more loan able fund with commercial banks, solving the liquidity problem.
  • Deregulation of Interest Rate: During the economic reforms period, interest rates or commercial banks were deregulated. Banks now enjoy freedom of fixing the lower and upper limits of interest on deposits. The slab level for this purpose has been reduced from Rs. 20 lakh to just Rs. 2 lakh. 
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