SLR: UPSC Daily Important Topic | 25 June 2022

SLR

✓SLR stands for Statutory Liquidity

✓Ratio which is a percentage of deposit that all the commercial banks in the country are required to maintain.

✓The commercial banks can maintain their SLR in forms of gold, liquid cash or any type of securities.

✓The Statutory Liquidity Ratio commonly known as SLR is a monetary tool employed by the central bank (RBI) to manage the liquidity.

✓SLR is a proportion of the Net Time and Demand Liabilities (NTDL) of commercial banks, which are supposed to be retained by them in the form of gold, cash, government securities or any other RBI approved securities and bonds.

✓Mostly the banks maintain SLR by investing in government securities, as it will earn them interest.

✓Unlike the Cash Reserve Ratio (CRR), the SLR is maintained in the own vault of every commercial bank.

✓The percentage of SLR is fixed by the Reserve Bank of India and varies according to the economic condition prevailing in the country.