Banking Terms defination of Statutory Liquidity Ratio (SLR)
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In IBPS Common Written Exam,there will be some questions asked on Banking and Financial Awareness.In this post on Banking Awareness,we have listed below the Common Banking and Financial terms.The Students must memorize these terms,so that they could answer all the Banking Awareness Questions Affirmatively.
Banking Terminology: Statutory Liquidity Ratio
- SLR (Statutory Liquidity Ratio) is the amount a commercial bank needs to maintain in the form of cash, or gold or govt. approved securities (Bonds) before providing credit to its customers.
- SLR rate is determined and maintained by the RBI (Reserve Bank of India) in order to control the expansion of bank credit.
- SLR is determined as the percentage of total demand and percentage of time liabilities. Time Liabilities are the liabilities a commercial bank liable to pay to the customers on their anytime demand.
- With the SLR (Statutory Liquidity Ratio), the RBI can ensure the solvency a commercial bank.
- It is also helpful to control the expansion of Bank Credits.
- By changing the SLR rates, RBI can increase or decrease bank credit expansion.
- Through SLR, RBI compels the commercial banks to invest in government securities like government bonds.
- SLR is used to control inflation and growth.
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