Economics • Banking & FinanceEasy
What does 'Statutory Liquidity Ratio (SLR)' require commercial banks to maintain in India?
A. A specified percentage of their net demand and time liabilities (NDTL) in liquid assets such as cash, gold, or approved securities.✓ Correct Answer
B. A fixed proportion of their capital reserves with international central banks.
C. A mandatory reserve fund exclusively meant for settling inter-bank foreign exchange transactions.
D. A security deposit with the Deposit Insurance and Credit Guarantee Corporation.
💡 Solution & Explanation
Statutory Liquidity Ratio requires commercial banks to maintain a specified percentage of their net demand and time liabilities in liquid assets such as cash, gold, or approved securities. It differs from the Cash Reserve Ratio which must be kept strictly with the central bank. SLR acts as a safeguard to ensure bank solvency during financial stress.
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