All About Statutory Liquidity Ratio (SLR)
The commercial banks in India have to maintain a reserve of gold, Government approved securities, or cash before providing credit to the customers. This is called the statutory liquidity ratio (SLR). This Ratio is Maintained and fixed by the Reserve Bank of India for controlling the expansion of the credit of banks.
It is basically the percentage of demands and time liabilities. It is a tool to control inflation and the growth of fuel. So it supports the money supply in the market respectively.
. Example: If you deposit rs 100- in the bank, CRR being 9%, and SLR being 11%, then the bank can use 100-9-11= Rs. 80/- for giving loans or for investment purposes.
