Banking Awareness Study Material
Statutory Liquidity Ratio (SLR)
Statutory Liquidity Ratio (SLR)
- It is the ratio or percentage of net total demand & time liabilities of commercial banks which they have to keep in form of liquid assets as excess reserves, they have to invest in government securities or in securities approved by RBI and current account balances with other banks.
- If RBI increases SLR then credit giving ability of bank decreases and money supply decreases.
- If RBI decreases SLR banks credit giving ability and thus money supply increases.
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