Consider the following statements with regard to Statutory Liquidity Ratio SLR 1 To meet SLR commerc...........

Economic Affairs Money Supply and Monetary Policy

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Consider the following statements with regard to Statutory Liquidity Ratio (SLR)

1.To meet SLR, commercial banks can use cash only

2.SLR is maintained by the banks with themselves

3.SLR restricts the banks leverage in pumping more money into the economy

Which of the statements given above is/are correct?

1, 2 and 3

1 and 3

2 and 3

Only 2

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Explanation:

1st statement is incorrect.
Statutory liquidity ratio (SLR) is the Indian government term for reserve requirement that the commercial banks in India require to maintain in the form of gold, government approved securities before providing credit to the customers. Statutory Liquidity Ratio is determined by Reserve Bank of India maintained by banks in order to control the expansion of bank credit.
The SLR is determined by a percentage of total demand and time liabilities.