Module: | Capital Adequacy, Basel Norms & Monetary Policy
Q6: What is the 'Statutory Liquidity Ratio' (SLR) in the context of Indian banking?
1. The mandatory cash balance banks must hold with the RBI to ensure solvency.
2. The percentage of NDTL that banks must maintain with themselves in the form of liquid assets like cash, gold, or unencumbered securities.
3. The ratio of liquid assets to total assets that a bank must report to the stock exchange.
4. The interest rate at which the RBI lends money to commercial banks for short-term needs.
Which of the statements given above is/are correct?
2. The percentage of NDTL that banks must maintain with themselves in the form of liquid assets like cash, gold, or unencumbered securities.
3. The ratio of liquid assets to total assets that a bank must report to the stock exchange.
4. The interest rate at which the RBI lends money to commercial banks for short-term needs.
Which of the statements given above is/are correct?
✅ Correct Answer: B
The correct answer is B. The Statutory Liquidity Ratio (SLR) is the minimum percentage of deposits (NDTL) that commercial banks must maintain with themselves in the form of highly liquid assets.
These approved assets exclusively include Cash, Gold, and unencumbered Government Securities (G-Secs) or State Development Loans (SDLs). This mandate is governed by Section 24(2A) of the Banking Regulation Act, 1949.
The maximum permissible limit for SLR is 40%. Option A describes the Cash Reserve Ratio (CRR), which is maintained with the RBI, not the bank itself.
Option C is a fabricated statement regarding stock exchange reporting, which has no bearing on SLR compliance.
Option D describes the Repo Rate or MSF Rate, which is the interest rate charged by the RBI when lending to banks, completely unrelated to the reserve holding requirements.
These approved assets exclusively include Cash, Gold, and unencumbered Government Securities (G-Secs) or State Development Loans (SDLs). This mandate is governed by Section 24(2A) of the Banking Regulation Act, 1949.
The maximum permissible limit for SLR is 40%. Option A describes the Cash Reserve Ratio (CRR), which is maintained with the RBI, not the bank itself.
Option C is a fabricated statement regarding stock exchange reporting, which has no bearing on SLR compliance.
Option D describes the Repo Rate or MSF Rate, which is the interest rate charged by the RBI when lending to banks, completely unrelated to the reserve holding requirements.