Should the RBI reduce the statutory liquidity ratio by 50 basis points then ........

Indian Economic System(HCS) Money and banking

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Should the RBI reduce the statutory liquidity ratio by 50 basis points, then:

India’s GDP will increase dramatically

Foreign institutional investors will bring in more capital

Scheduled commercial banks will cut their lending rates

Liquidity in the banking system will be drastically reduced

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Explanation:

By changing the level of SLR, the Reserve Bank of India can increase or decrease bank credit expansion. Ensuring the solvency of commercial banks. By reducing the level of SLR, the RBI can increase liquidity with the commercial banks, resulting in increased investment. This is done to fuel growth and demand.