Statutory Liquidity Ratio (SLR)
Statutory Liquidity Ratio (SLR) is a tool used by the Reserve Bank of India (RBI) to control the amount of money banks can lend. It is the percentage of total deposits that banks must maintain in the form of cash, gold, or approved securities before providing credit to customers. The SLR is determined by the RBI and is subject to change from time to time. The SLR is used to control the expansion of bank credit and to ensure that banks have enough liquidity to meet their obligations.
History of SLR
The concept of SLR was first introduced in India in the Banking Regulation Act of 1949. The purpose of the SLR was to ensure that banks had enough liquidity to meet their obligations and to prevent them from taking excessive risks. The SLR was initially set at 25%, but it has been changed several times over the years. In April 2020, the SLR was reduced from 18.75% to 17.50%.
Comparison of SLR
| Year | SLR (%) |
|---|---|
| 2020 | 17.50 |
| 2019 | 18.75 |
| 2018 | 19.50 |
| 2017 | 20.75 |
Summary
Statutory Liquidity Ratio (SLR) is a tool used by the Reserve Bank of India (RBI) to control the amount of money banks can lend. It is the percentage of total deposits that banks must maintain in the form of cash, gold, or approved securities before providing credit to customers. The SLR is determined by the RBI and is subject to change from time to time. For more information about SLR, you can visit the RBI website or consult a financial advisor.
See Also
- Cash Reserve Ratio (CRR)
- Repo Rate
- Reverse Repo Rate
- Marginal Standing Facility (MSF)
- Bank Rate
- Liquidity Adjustment Facility (LAF)
- Open Market Operations (OMO)
- Monetary Policy
- Inflation
- Credit Risk
