* What is SLR? *********** SLR stands for Statutory Liquidity Ratio. This term is used by bankers and indicates the minimum percentage of deposits that the bank has to maintain in form of gold, cash or other approved securities. In other words, it is ratio of cash and some other approved securities to liabilities (deposits). It regulates the credit growth in India. - The main objectives for maintaining the SLR ratio are as following: ****************************************** - i. To control the expansion of bank credit. By changing the level of SLR, the Reserve Bank of India can increase or decrease bank credit expansion. - ii. To ensure the solvency of commercial banks. - iii. To compel the commercial banks to invest in government securities like government bonds. - iv. If any Indian bank fails to maintain the required level of Statutory Liquidity Ratio, then it becomes liable to pay penalty to Reserve Bank of India. .........................................
Posted on: Thu, 22 Aug 2013 02:31:58 +0000
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