WHAT IS STATUTORY LIQUIDITY RATIO (SLR)?

Statutory Liquidity Ratio or SLR is a minimum percentage of deposits that a commercial bank has to maintain in the form of liquid cash, gold or other securities. It is basically the reserve requirement that banks are expected to keep before offering credit to customers. These are not reserved with the Reserve Bank of India (RBI), but with banks themselves. The SLR is fixed by the RBI. CRR (Cash Reserve Ratio) and SLR have been the traditional tools of the central bank's monetary policy to control credit growth, flow of liquidity and inflation in the economy.  The SLR was prescribed by Section 24 (2A) of Banking Regulation Act, 1949.

Importance of SLR

Difference between SLR and CRR