The term SLR is an acronym for which banking ratio?

The term SLR is an acronym for which banking ratio?

• A. Statutory Liquidity Ratio
• B. Systemic Liquidity Ratio
• C. Standard Loan Ratio
• D. Special Liquidity Ratio

Answer: (A)

Statutory Liquidity Ratio is a regulatory requirement for banks in India. It mandates maintaining a prescribed percentage of net demand and time liabilities in liquid assets such as cash, gold, and certain government securities. This built-in liquidity cushion helps banks meet sudden withdrawal demands and supports stability in the financial system. RBI sets and adjusts the ratio to influence liquidity and monetary conditions. Other terms like Systemic Liquidity Ratio, Standard Loan Ratio, or Special Liquidity Ratio are not recognized regulators' ratios used in this context, which is why the correct term is Statutory Liquidity Ratio. It's also distinct from the Cash Reserve Ratio, which is a separate liquidity requirement kept with the central bank.

Statutory Liquidity Ratio is a regulatory requirement for banks in India. It mandates maintaining a prescribed percentage of net demand and time liabilities in liquid assets such as cash, gold, and certain government securities. This built-in liquidity cushion helps banks meet sudden withdrawal demands and supports stability in the financial system. RBI sets and adjusts the ratio to influence liquidity and monetary conditions. Other terms like Systemic Liquidity Ratio, Standard Loan Ratio, or Special Liquidity Ratio are not recognized regulators' ratios used in this context, which is why the correct term is Statutory Liquidity Ratio. It's also distinct from the Cash Reserve Ratio, which is a separate liquidity requirement kept with the central bank.