Module: | Priority Sector, Consumer Protection & Digital Lending
Q71: Identify the INCORRECT statement regarding the classification of securities for SLR:
✅ Correct Answer: C
The correct answer is C. This statement is fundamentally incorrect.
For any asset to qualify for the Statutory Liquidity Ratio (SLR), it must be absolutely unencumbered.
This means the bank must have clear, unhindered ownership without any lien, pledge, or external claim.
If a bank pledges a government security to another commercial bank to secure a loan, that security is immediately encumbered.
Because the bank cannot liquidate it instantly during a crisis without paying off the loan first, it completely loses its SLR eligibility.
Statements A, B, and D are perfectly correct.
Securities in the HTM (Held to Maturity) portfolio, short-term Cash Management Bills (CMBs), and all tenors of Treasury Bills (T-Bills) are fully eligible approved securities for SLR computation.
For any asset to qualify for the Statutory Liquidity Ratio (SLR), it must be absolutely unencumbered.
This means the bank must have clear, unhindered ownership without any lien, pledge, or external claim.
If a bank pledges a government security to another commercial bank to secure a loan, that security is immediately encumbered.
Because the bank cannot liquidate it instantly during a crisis without paying off the loan first, it completely loses its SLR eligibility.
Statements A, B, and D are perfectly correct.
Securities in the HTM (Held to Maturity) portfolio, short-term Cash Management Bills (CMBs), and all tenors of Treasury Bills (T-Bills) are fully eligible approved securities for SLR computation.