Originally posted 2022-03-03 23:46:46.
The full form of SLR is the Statutory Liquidity Ratio. As per RBI guidelines, every commercial bank has to maintain a specified portion of cash, gold, or another liquid asset which is called SLR. Moreover, it is the reserve that is available by the bank in order to control the expansion. Liability and total demand determine this rate. Time liabilities are the liabilities that are payable on a certain time period as per the agreement. But it has an upper limit of 40% and a lower limit of 23%. The statutory Liquidity Ratio is the one of monetary policy which regulates the flow of money. It also stabilizes the prices to run the economy.
SLR is known as the Statutory Liquidity Ratio. It is RBI rules; every profitable bank has to uphold a specified portion of cash, gold, or another liquid asset which is called SLR. Time obligations are the accountabilities that are payable on a certain period as per the agreement. But it has an upper limit of 40% and a lower limit of 23%.
Normally, it ensures that the specific amount is safe. It tells us about the amount available for customers to redeem. The RBI raises SLR to control the credit during inflation and it decreases SLR during the deflation to increase the bank credit. It is the order of RBI, every bank has to maintain SLR if anyone was unable to maintain it then they will have to pay a penalty of 3% over the bank rate. Moreover, it helps to curtail the banks from liquidation, it shows the bank has a good position in the market.
SLR and CRR-;
CRR or cash reserve ratio is the smallest proportion/percentage of a bank’s deposits to be held in the form of cash. now we can say that SLR or statutory liquidity ratio is the smallest percentage of deposits that a bank has to keep in form of gold, cash, or other authorized shelters.
What is the formula for calculating Statutory Liquidity Ratio (SLR)?
The formula is as follows:
SLR rate = (liquid assets / (demand + time liabilities) × 100%
The SLR is fixed by the RBI. It is like control over the growth of credit in India. SLR is maintained in the form of cash, gold, government bonds, or approved securities.
What are SLR and CRR?
The percentage of money that a bank keeps in the form of cash with RBI is called the Cash reserve ratio (CRR) whereas the proportion of liquid assets to time and demand liabilities is called SLR. The SLR is set by the Reserve Bank of India.
| Term | Full Form |
| SLR | Statutory Liquidity Ratio |
FAQ’s
As per RBI guidelines, every commercial bank has to maintain a specified portion of cash, gold, or another liquid asset which is called SLR. Moreover, it is the reserve that is available by the bank in order to control the expansion. Liability and total demand determine this rate.
SLR is short form of Statutory Liquidity Ratio.
Statutory Liquidity Ratio is Full Form of SLR.
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