Economics • Banking & FinanceEasy
Which of the following defines 'Statutory Liquidity Ratio (SLR)'?
A. The minimum percentage of deposits that a commercial bank must maintain with the central bank in cash
B. The proportion of liquid assets that commercial banks must maintain in the form of cash, gold, or approved securities before lending to customers✓ Correct Answer
C. The maximum interest rate banks can charge on agricultural loans
D. The reserve requirement mandated exclusively for foreign banks operating in India
💡 Solution & Explanation
Statutory Liquidity Ratio is defined under Section 24 of the Banking Regulation Act, 1949, mandating commercial banks to keep a specified percentage of their net demand and time liabilities in liquid assets. Confusing this with the Cash Reserve Ratio leads to incorrect assumptions involving deposits kept with the central bank.
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