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» Stock market for beginner » SLR (Statutory Liquidity Ratio)

Every bank in India has got to maintain at the shut of business each day, a minimum proportion of their web demand and time liabilities as quick assets within the kind of cash, gold and UN-encumbered approved securities. The ratio of quick assets to demand and time liabilities is thought as Statutory Liquidity ratio (SLR).

              If you deposit Rs. 100/- in bank, CRR being 6% and SLR being 8%, then bank can use 100-6-8= Rs. 86/- for giving loan or for investment purpose.

What will a discount in SLR mean?

A cut in SLR implies that the house, car and commercial loan rates will go down. It additionally implies that banks will currently have the option of selling Rs 40,000 large integer of government securities that until now fashioned part of their statutory investments.

The run batted in is empowered to increase this ratio up to four-hundredth. an increase in SLR additionally limit the bank's leverage position to pump extra money into the economy.

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