Question

What is Statutory Liquidity Ratio (SLR)?

Hint:

SLR is the portion of a bank's money it must keep in safe, liquid assets. A higher SLR means less money for the bank to lend out.

Answer 1

The Statutory Liquidity Ratio (SLR) is a monetary policy tool used by central banks. It refers to the minimum percentage of a commercial bank's Net Demand and Time Liabilities (NDTL) that it must maintain in the form of liquid assets. These liquid assets can be cash, gold, or government-approved securities. By adjusting the SLR, the central bank can control the amount of money available for banks to lend, thus regulating credit growth in the economy.