What is SLR in banking?
The full form of SLR is Statutory Liquidity Ratio. This is the fullform of what is SLR in banking.
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The term refers to the minimum reserve requirement that had to be maintained by the commercial banks in India. As per the guidelines of the Reserve Bank of India (RBI), the word statuary denotes something that is mandatorily and legally required. The term Statutory Liquidity denotes the minimum amount a commercial bank has to maintain through gold, cash and other security deposits. We should know that these deposits are not shared by the Reserve Bank of India but with the bank themselves. This is the SLR meaning in banking in simple terms.
Get home loans at the lowest interest rate and avoid hefty paperwork.What is SLR in banking terms: how does it work?
As per the rule, every bank must have a particular amount of their Net Demand and Time Liabilities in terms of cash, gold, and other liquid assets. The ratio of the liquid assets and time liabilities is known as the Statutory Liquidity Ratio (SLR). The Reserve Bank of India (RBI) has the ability to increase the ratio by 40%.
An increase in the ratio disdains the bank to inject money into the economy. RBI helps to regulate the flow of money and stability of prices which in turn helps to run the economy. SLR is one of the monetary policies which ensures the solvency of the bank and cash flow in the economy. This is what is SLR in banking terms.
Read more: What Is The Difference Between Bank Rate And Repo Rate? What Is Repo Rate Of RBI?Your Feedback Matters! How was this Answer?
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What is SLR in banking?
Simran
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2022-04-18T10:52:22+00:00 2022-04-18T10:52:23+00:00Comment
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