Wednesday, July 9, 2008

Statutory Liquidity Ratio (SLR)

SLR is the amount of money that the banks need to maintain in the form of cash , gold or other securities. This amount is expresses in the form of percentage and generally depends on the demand and banks liabilities.

SLR is used to help
1) in containing inflation
2) to secure the solvency of banks
3) augment more bank investment in G-Secs' ( by not keeping enough cash at hand)

No comments: