Don’t miss the latest developments in business and finance.

image

SLR

About SLR

Facebook IconLinkedIN Icon

What is Statutory Liquidity Ratio (SLR)?

Statutory Liquidity Ratio

Statutory Liquidity Ratio or SLR is a minimum percentage of deposits that a commercial bank has to maintain in the form of liquid cash, gold or other securities. It is basically the reserve requirement that banks are expected to keep before offering credit to customers. These are not reserved with the Reserve Bank of India (RBI), but with banks themselves. The SLR is fixed by the RBI. CRR (Cash Reserve Ratio) and SLR have been the traditional tools of the central bank's monetary policy to control credit growth, flow of liquidity and inflation in the economy.  The SLR was prescribed by Section 24 (2A) of Banking Regulation Act, 1949.

Importance of SLR

The government uses the SLR to regulate inflation and liquidity. Increasing the SLR will control inflation in the economy while decreasing it will cause growth in the economy. Although, the SLR is a monetary policy instrument of RBI, it is important for the government to make its debt management programme successful. SLR has helped the government to sell its securities or debt instruments to banks. Most of the banks will be keeping their SLR in the form of government securities as it will earn them an interest income.

Difference between SLR and CRR

Cash Reserve Ratio is the percentage of the deposit (NDTL) that a bank has to keep with the RBI. CRR is kept in the form of cash and that also with the RBI. No interest is paid on such reserves.
On the other hand, SLR is the percentage of deposit that the banks have to keep as liquid assets in their own vault.
The CRR is a more active and useful monetary policy tool compared to the SLR. Usually, the RBI changes CRR to manage liquidity in the economy.

Here are the latest news from Business Standard

Latest News

Stay with us for all the major news updates from around the world

Updated On: 21 Dec 2024 | 7:12 PM IST

The vice president also cautioned against people who have inimical intentions and evil designs towards the country's progress

Updated On: 21 Dec 2024 | 7:05 PM IST

The top three raiders of PKL 2024, Devank, Ashu and Arjun, will be in action today

Updated On: 21 Dec 2024 | 7:00 PM IST

This kind of therapy is expected to make advanced treatments like CAR-T cell therapies more affordable and accessible for patients in India

Updated On: 21 Dec 2024 | 6:57 PM IST

During a meeting, the party also decided to strengthen the organisation in the state and continue the agitation against the BJP for allegedly insulting the architect of the Constitution, BR Ambedkar

Updated On: 21 Dec 2024 | 6:50 PM IST

It added that the court has consistently held that prolonged separation, coupled with inability to reconcile, is a relevant factor in deciding matrimonial disputes

Updated On: 21 Dec 2024 | 6:41 PM IST

Fitch upgraded Sri Lanka's long term credit default rating to CCC+ from CCC- on Friday as it said that the risk of another default on local currency debt has been reduced

Updated On: 21 Dec 2024 | 6:31 PM IST

"Ready-to-eat popcorn", which is mixed with salt and spices, and has the essential character of namkeens currently attracts a 5 per cent GST if it is not pre-packaged and labelled

Updated On: 21 Dec 2024 | 6:27 PM IST

Of the 16 million NPS subscriber base, 6.2 million are from the private sector and 1.8 million from the corporate sector

Updated On: 21 Dec 2024 | 6:19 PM IST

The landslide probably occurred when debris from another road that is under construction above the main road started sliding

Updated On: 21 Dec 2024 | 6:08 PM IST

The new route caters to the growing demand for travel between the two cities, offering both business and leisure travellers a convenient and affordable option

Updated On: 21 Dec 2024 | 6:02 PM IST

Authorities arrested a 50-year-old man at the site of the attack in Magdeburg on Friday evening and took him into custody for questioning. He has lived in Germany for nearly two decades

Updated On: 21 Dec 2024 | 5:59 PM IST

Ways to deepen cooperation in tackling threats of terrorism were discussed at a meeting of the India-Russia joint working group (JWG) on counter-terrorism cooperation

Updated On: 21 Dec 2024 | 5:48 PM IST

As part of the "Ambedkar Samman Saptah", Congress workers and leaders will hold marches and press conferences to remember the legacy of B R Ambedkar

Updated On: 21 Dec 2024 | 5:30 PM IST

The government has tweaked an election rule to prevent public inspection of certain electronic documents such as CCTV camera and webcasting footage

Updated On: 21 Dec 2024 | 5:24 PM IST

The Punjab batter's blistering 115 off 45 balls led Punjab to a dominant nine-wicket win over Arunachal Pradesh

Updated On: 21 Dec 2024 | 5:24 PM IST

The Haryana government declared a three-day state mourning on Friday. It has also declared Saturday a public holiday in all its offices as a mark of respect

Updated On: 21 Dec 2024 | 5:22 PM IST

Shah, addressing the 72nd plenary of the North Eastern Council (NEC) here, said Prime Minister Narendra Modi has brought peace in the region by inking 20 peace accords in 10 years

Updated On: 21 Dec 2024 | 5:12 PM IST

The playoffs of PKL 2024 will begin on December 26 with an eliminator and will end with the final on December 29

Updated On: 21 Dec 2024 | 5:11 PM IST

The UoI is set to emerge as the first institute of eminence in the state and aligns with Chief Minister N Chandrababu Naidu's aim to provide the state's youth with education in AI, other technology

Updated On: 21 Dec 2024 | 5:01 PM IST

No More Data