The Statutory Liquidity Ratio (SLR) is a measure under which all Scheduled Commercial Banks in India must maintain an amount in one of the following forms as a percentage of their total Net Demand and Time Liabilities (NDTL)
[i] Cash.
[ii] Gold; or
[iii] Investments in un-encumbered Instruments that include;
(a) Treasury-Bills of the Government of India.
(b) Dated securities including those issued by the Government of India from time to time under the market borrowings programme and the Market Stabilization Scheme (MSS).
(c) State Development Loans (SDLs) issued by State Governments under their market borrowings programme.
(d) Other instruments as notified by the RBI.
Traditionally the amount to be held thus was stipulated to be no lower than 25 percent and not exceeding 40 percent of the bank’s total DTL. However, effective from January, 2007 the floor of 25 percent on the SLR was removed following an amendment of the Banking Regulation Act, 1949.
As of August, 2011 the SLR stands at 24 percent.
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