Module: | Deposits, Reserve Ratios & Branch Authorisation
Q292: To maintain the Statutory Liquidity Ratio (SLR), banks can hold assets in various forms. Which of the following is NOT an eligible form of asset for SLR maintenance?
1. Cash balances in excess of the CRR requirement
2. Gold valued at a price not exceeding the current market price
3. Dated government securities pledged with the RBI for availing the Repo facility
4. Unencumbered approved securities
Which of the statements given above is/are correct?
2. Gold valued at a price not exceeding the current market price
3. Dated government securities pledged with the RBI for availing the Repo facility
4. Unencumbered approved securities
Which of the statements given above is/are correct?
✅ Correct Answer: C
The correct answer is C. To qualify as an eligible asset for the Statutory Liquidity Ratio (SLR), the asset must be strictly "unencumbered," meaning it is completely free from any lien, pledge, or external claim.
Option C describes dated government securities that have been actively pledged with the RBI to borrow funds through the Liquidity Adjustment Facility (LAF) Repo window.
Once pledged, these securities become encumbered and are immediately disqualified from SLR calculations.
Option A is a valid SLR asset, as excess cash balances (beyond the CRR mandate) kept with the RBI or in the bank's own vault count towards SLR.
Option B is a valid SLR asset, as physical gold valued at a conservative price not exceeding the current market price is an approved holding.
Option D is a valid SLR asset, as unencumbered approved securities (like free G-Secs) form the bulk of SLR portfolios.
Option C describes dated government securities that have been actively pledged with the RBI to borrow funds through the Liquidity Adjustment Facility (LAF) Repo window.
Once pledged, these securities become encumbered and are immediately disqualified from SLR calculations.
Option A is a valid SLR asset, as excess cash balances (beyond the CRR mandate) kept with the RBI or in the bank's own vault count towards SLR.
Option B is a valid SLR asset, as physical gold valued at a conservative price not exceeding the current market price is an approved holding.
Option D is a valid SLR asset, as unencumbered approved securities (like free G-Secs) form the bulk of SLR portfolios.