Statutory reserves refer to the reserves that commercial banks in India are legally required to maintain as per the regulations set by the Reserve Bank of India (RBI). These reserves are crucial for controlling liquidity, ensuring the solvency of banks, and regulating the flow of credit in the economy. There are two key statutory reserves: The CRR is the percentage of a bank's total deposits that must be kept as reserves in the form of cash with the RBI. It is a tool used by the RBI to control liquidity in the banking system. The SLR is the percentage of a bank's net demand and time liabilities (NDTL) that must be maintained in the form of liquid assets such as government securities, gold, or cash.