BANKING AFFAIRS

Detailed explanation-1: -In India, the Statutory liquidity ratio (SLR) is the Government term for the reserve requirement that commercial banks are required to maintain in the form of cash, gold reserves, Govt. bonds and other Reserve Bank of India (RBI)-approved securities before providing credit to the customers.

Detailed explanation-2: -Statutory Liquidity Ratio popularly called SLR is the minimum percentage of deposits that the commercial bank maintains through gold, cash and other securities. However, these deposits are maintained by the banks themselves and not with the RBI or Reserve Bank of India. Current SLR in India – 18.00%

Detailed explanation-3: -The eligible assets for SLR mainly include cash, gold and approved securities by the RBI. Most banks keep the SLR in the form of government approved securities specifically – central government bonds and treasury bills as they give a reasonable return.

Detailed explanation-4: -CRR is a reserve maintained by banks with the RBI. It is a percentage of the banks’ deposits maintained in cash form. SLR is an obligatory reserve that commercial banks must maintain themselves.

Detailed explanation-5: -The SLR investments may be in the form of cash or liquid assets such as government securities or bonds. The non-SLR investments are the investments which are made by the commercial banks in the central bank or government securities to earn interest income and are not covered as a part of SLR investment.