What is the Statutory Liquidity Ratio (SLR)?
Statutory Liquidity Ratio (SLR) is defined as the minimum amount and/or percentage of cash, gold, or other liquid assets that every bank needs to maintain at the end of the day. Statutory Liquidity Ratio (SLR) is to be maintained by commercial banks with themselves. The banks must maintain such an amount to discharge their liabilities. Statutory Liquidity Ratio is determined as per the bank’s liabilities, but in India, it is set up by the Reserve Bank of India (RBI). RBI has the control to change SLR at any time, and it can increase SLR up to 40%.
Table of Content
- Objectives of Statutory Liquidity Ratio (SLR)
- Components of Statutory Liquidity Ratio (SLR)
- How Does Statutory Liquidity Ratio (SLR) Work?
- Impact of Statutory Liquidity Ratio (SLR)
- Difference between Statutory Liquidity Ratio (SLR) and Cash Reserve Ratio (CRR)
- Conclusion
Key Components of Statutory Liquidity Ratio (SLR):
- SLR is the minimum amount that all commercial bank needs to maintain with themselves in order to meet their liabilities.
- SLR can be maintained in the form of cash, gold, or other liquid securities.
SLR | Full Form, Objectives, Components and Examples
The full form of SLR is Statutory Liquidity Ratio. SLR is defined as the minimum liquidity percentage that every bank has to maintain with them in order to discharge their liability as and when occurs. This liquidity can be maintained in the form of cash, gold, and other liquid assets. SLR is the amount that commercial banks need to maintain with themselves, not with the Reserve Bank of India (RBI).