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 statutory liquidity ratio (SLR). This Ratio is Maintained and fixed by 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 growth of fuel. So it supports the money supply in the market respectively.