What does SLR stand for in banking?

What does SLR stand for in banking?

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

Answer: (B)

SLR refers to a regulatory requirement that banks must hold a minimum portion of their net demand and time liabilities in liquid assets. This ensures they have readily available funds to meet withdrawals and other short-term obligations, helping maintain financial stability. The term itself—Statutory Liquidity Ratio—reflects that it is a statutory mandate set by the central bank and enforced as part of the banking regulations. Liquid assets typically include cash, gold, and high-quality government securities that can be quickly converted to cash. This is different from the Cash Reserve Ratio, which focuses on reserves kept with the central bank. The other phrases listed don’t correspond to a formal regulatory standard in banking, so the established term is the correct one.

SLR refers to a regulatory requirement that banks must hold a minimum portion of their net demand and time liabilities in liquid assets. This ensures they have readily available funds to meet withdrawals and other short-term obligations, helping maintain financial stability. The term itself—Statutory Liquidity Ratio—reflects that it is a statutory mandate set by the central bank and enforced as part of the banking regulations. Liquid assets typically include cash, gold, and high-quality government securities that can be quickly converted to cash. This is different from the Cash Reserve Ratio, which focuses on reserves kept with the central bank. The other phrases listed don’t correspond to a formal regulatory standard in banking, so the established term is the correct one.