27 January 2017

Statutory Liquidity Ratio

What is SLR?
Apart from the Cash Reserve Ratio, scheduled banks in India are required to maintain, at the close of business every day, a minimum proportion of their Net Demand and Time Liabilities,liquid assets in the form of gold, cash and approved securities. The ratio of liquid assets to demand and time liabilities is known as Statutory Liquidity Ratio (SLR). Reserve Bank of India is empowered to increase Statutory Liquidity Ratio (SLR) up to 40%. An increase in SLR also reduces their (Bank’s) capacity to grant loans and advances, thus it is an anti-inflationary impact.

What is SLR (Non Bankers Point of View)?
SLR stands for Statutory Liquidity Ratio. This term is used by bankers and indicates the minimum percentage of deposits that the bank has to maintain in form of gold, cash or other approved securities. Thus, it is ratio of cash and some other approved to liabilities (deposits) It regulates the credit growth in India.

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