Economics • Banking & FinanceMedium
Under which statutory provision are scheduled commercial banks in India required to maintain the Statutory Liquidity Ratio (SLR)?
A. Section 42 of the Reserve Bank of India Act, 1934
B. Section 24 of the Banking Regulation Act, 1949✓ Correct Answer
C. Section 35A of the Banking Regulation Act, 1949
D. Section 17 of the Reserve Bank of India Act, 1934
💡 Solution & Explanation
Section 24 of the Banking Regulation Act, 1949 requires scheduled commercial banks to maintain a stipulated proportion of their net demand and time liabilities in liquid assets as Statutory Liquidity Ratio. Section 42 of the Reserve Bank of India Act, 1949 governs the Cash Reserve Ratio instead. These statutory liquidity mandates provide buffers for banking sector stability.
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