The Reserve Bank could at best set limits on the secondary expansion of money through instruments such as cash reserve ratio (CRR), statutory liquidity ratio (SLR) and selective credit controls.
As a result, CRR reached its prescribed ceiling of 15 per cent of net demand and time liabilities (NDTL) of banks in July 1989 and the SLR reached the peak of 38.5 per cent in September 1990. Despite these measures, however, money supply growth remained high, which contributed to inflation.