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

Economic Affairs Money Supply and Monetary Policy

Download Solution PDF

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 bank’s leverage in pumping more money into the economy

Which of the statements given above is/are correct?

1, 2 and 3

1 and 3 Only

2 and 3 Only

2 Only

छोटे Courses बड़े Results

Master Money Supply and Monetary Policy

Prepare through Micro-courses

Try Now

Explanation:

SLR stands for Statutory Liquidity Ratio. SLR is maintained by the banks as per the directions of RBI. It is the minimum percentage of deposits that the bank has to maintain in form of gold, cash or other approved securities
Banks have to maintain a stipulated proportion of their net demand and time liabilities in the form of liquid assets like cash, gold and unencumbered securities. Treasury bills, dated securities issued under market borrowing programme and market stabilisation schemes (MSS), etc also form part of the SLR. Banks have to report to the RBI every alternate Friday their SLR maintenance, and pay penalties for failing to maintain SLR as mandated.