SLR means STATUTORY LIQUIDITY RATIO.
It is that percentage of total deposits which the commercial banks are supposed to maintain in LIQUID FORM.
LIQUID FORM means:
Liquid Funds like Cash,
Gold
Government Treasury Bills.
Such SLR is used by the banks in case of emergency.
As you may know, Banks lend to borrowers from the deposits they get.
If the entire deposits are lent, then bank will not have any margin funds left with it, for emergency cases.
Hence RBI has made it mandatory for banks to maintain CRR (Percentage of deposits that banks maintain with RBI)
AND SLR.
SLR is for a liquid ratio.
Liquid ratio = Liquid Asset/Current Liablities
Liquid Asset = Current Asset-Stock
Current Asset Ratio(CAR)
Current asset/ Current Liablities
Current asset is the asset which is easily liquified with in a span of maximum 1 year.
Current liablities is the liablity which has to be payed in with in 1 year.
Besides the CRR, banks are required to invest a portion of their deposits in government securities as a part of their statutory liquidity ratio (SLR) requirements. What SLR does is again restrict the bank’s leverage in pumping more money into the economy.
SLR means statutory liquid ratio.
This is one of the key ratios used by RBI to control the liquidity
SLR means Statuary Liquidity Ratio..
in leman language its d minimum amounts of cash that d banks have to keep wid dem at all times for lending or withdrawal..
