LRR CRR SLR CDR Explained for UPSC BPSC RBI NABARD

Updated June 2026 • Trusted by 50,000+ aspirants

LRR CRR SLR CDR Explained for UPSC BPSC RBI NABARD Aspirants

Complete, exam-focused guide with current RBI rates, formulas, interactive calculator and practice questions.

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LRR CRR SLR CDR are the most important monetary policy tools used by the Reserve Bank of India. LRR (Legal Reserve Ratio) is the sum of CRR and SLR and decides how much banks must keep as reserves versus lend to the economy. This complete updated guide explains LRR CRR SLR CDR with June 2026 rates, clear formulas, policy impacts, an interactive bank lending calculator, comparison tables, and targeted MCQs & Mains questions for UPSC, BPSC, RBI Grade B, NABARD and IES aspirants.

Current RBI Policy Rates (June 2026)

Verify latest rates on rbi.org.in

CRR

Cash Reserve Ratio

↓ Reduced in 2025

SLR

18%

Statutory Liquidity Ratio

Stable

LRR

21%

Legal Reserve Ratio

CRR + SLR = 3% + 18%

C-D Ratio

75-80%

Credit-Deposit Ratio

Ideal Range (RBI)

Why LRR CRR SLR CDR Matter for Exams

These are among the most important monetary policy tools used by the Reserve Bank of India. Questions on LRR, CRR, SLR, and Credit-Deposit Ratio appear regularly in Prelims and Mains of UPSC CSE, BPSC, RBI Grade B, NABARD, and IES examinations.

Pro Tip Focus on conceptual clarity + current rates + impact on economy + money multiplier

LRR CRR SLR CDR Explained: Definitions, Current Rates & Exam Importance

Master the core concepts with clear explanations and exam-focused insights.

LRR Legal Reserve Ratio

Formula: LRR = CRR + SLR

Current (June 2026): 21% (3% + 18%)

Not independently fixed by RBI. It is the total reserve requirement that determines the money multiplier.

CRR Cash Reserve Ratio

Current Rate: 3%

Held with: RBI (Current Account)

Interest: Zero

Liquidity: Very High

↑ CRR = Less lending power → Controls inflation
↓ CRR = More credit → Boosts growth

SLR Statutory Liquidity Ratio

Current Rate: 18%

Held with: The Bank itself

Interest: Yes (on G-Secs)

Liquidity: High

Supports government borrowing + acts as liquidity buffer for banks.

CDR / C-D Ratio Credit-Deposit Ratio

Formula: (Total Loans / Total Deposits) × 100

Ideal Range: 75% – 80%

Not a statutory reserve. It is a key performance & risk indicator monitored by RBI.

See How LRR CRR SLR CDR Work Together

LRR CRR SLR CDR explained infographic showing RBI monetary policy tools Legal Reserve Ratio CRR SLR breakdown current rates for UPSC BPSC RBI NABARD IES aspirants

The infographic above shows how LRR (21%) is composed of CRR (3%) held with RBI and SLR (18%) maintained by banks in liquid assets. Changes in these ratios directly impact lending capacity, inflation, and economic growth.

Money Multiplier & LRR

The Legal Reserve Ratio (LRR) directly determines how much new money the banking system can create from an initial deposit.

Theoretical Money Multiplier = 1 / LRR
With current LRR of 21% → Multiplier ≈ 4.76

Example: ₹100 crore deposited in Bank A. Bank keeps LRR = 21% (₹21 crore) as reserves. Lendable amount = ₹79 crore. This process continues across the banking system.

Total money created ≈ ₹100 × (1 / 0.21) = ₹476 crore

Exam Note: In reality the multiplier is lower due to Currency Drain Ratio and excess reserves. UPSC often asks theoretical vs practical aspects.

Detailed LRR CRR SLR CDR Comparison Table

CRR vs SLR vs LRR vs CDR comparison chart for UPSC and banking exams – differences in where reserves are held, interest, liquidity and policy impact

Ratio	Full Form	Held With	Interest	Liquidity	Policy Impact	Current / Ideal
CRR	Cash Reserve Ratio	RBI	Zero	Very High	Direct control on money supply	3%
SLR	Statutory Liquidity Ratio	Bank itself	Yes (G-Secs)	High	Supports govt borrowing + liquidity buffer	18%
LRR	Legal Reserve Ratio	Combined	Mixed	Moderate	Determines money multiplier & credit creation	21%
CDR	Credit-Deposit Ratio	—	—	—	Performance & risk indicator	75–80%

Bank Lending Calculator (Live)

See instantly how much a bank can lend with current LRR of 21% (CRR 3% + SLR 18%).

Total Deposits (₹ Crore)

Maximum Lendable Amount

79.00

Crore (79% of deposits)

Practice Questions

Prelims MCQs (Self-Scoring) Score: 0/3

Q1. What does LRR stand for and how is it calculated?

Q2. Which of the following is true about CRR?

Q3. An increase in CRR/SLR by RBI is likely to have which effect?

Mains Practice Questions

Q1. Discuss the role of CRR and SLR as tools of monetary policy in India. How do changes in these ratios impact economic growth and inflation? (250 words)

Q2. Explain the significance of Credit-Deposit Ratio in assessing a bank’s performance. How is it influenced by CRR and SLR? (200 words)

Quick Revision — Key Takeaways on LRR CRR SLR CDR

LRR is not independently fixed by RBI — it is simply CRR + SLR.

CRR earns zero interest and is held with RBI. Most powerful direct tool for liquidity control.

SLR can earn interest (G-Secs) and is maintained by the bank itself. Also helps government borrowing.

Higher CRR/SLR → Contractionary monetary policy (controls inflation).

Lower CRR/SLR → Expansionary (boosts credit & growth).

C-D Ratio is a key health indicator of banks. RBI prefers it around 75-80%.

Explore Official Sources & More from CrackTarget

Official RBI Website (Current Rates) RBI Press Releases → More RBI & Monetary Policy Notes → UPSC CSE Complete Hub → Free Economy One-Liners & Mock Tests

LRR, CRR, SLR & CDR Explained | RBI Banking Ratios

Current RBI Policy Rates (June 2026)

Why LRR CRR SLR CDR Matter for Exams

LRR CRR SLR CDR Explained: Definitions, Current Rates & Exam Importance

See How LRR CRR SLR CDR Work Together

Money Multiplier & LRR

Detailed LRR CRR SLR CDR Comparison Table

Bank Lending Calculator (Live)

Practice Questions

Prelims MCQs (Self-Scoring) Score: 0/3

Mains Practice Questions

Quick Revision — Key Takeaways on LRR CRR SLR CDR

Explore Official Sources & More from CrackTarget

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