With reference to the Statutory Liquidity Ratio (SLR), consider the following statements:
1. The SLR is maintained by commercial banks in the form of cash, gold, or other securities.
2. The Reserve Bank of India (RBI) prescribes the percentage of SLR that commercial banks must maintain.
3. The SLR requirement is used by the RBI as a tool to manage inflation and control the flow of credit in the economy.

Which of the statements given above are correct?
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3

Question

With reference to the Statutory Liquidity Ratio (SLR), consider the following statements:
1. The SLR is maintained by commercial banks in the form of cash, gold, or other securities.
2. The Reserve Bank of India (RBI) prescribes the percentage of SLR that commercial banks must maintain.
3. The SLR requirement is used by the RBI as a tool to manage inflation and control the flow of credit in the economy.

Which of the statements given above are correct?
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3

ONLiNE UPSC · Accepted Answer

Statement 1 is correct : The Statutory Liquidity Ratio (SLR) is the minimum percentage of a commercial bank's net demand and time liabilities (NDTL) that must be maintained in the form of liquid assets like cash, gold, or government-approved securities (such as government bonds). It is not kept with the RBI but with the commercial banks themselves.

Statement 2 is correct : The SLR is determined and prescribed by the Reserve Bank of India (RBI). The RBI sets the percentage that commercial banks are required to maintain as liquid assets, and it is periodically reviewed based on economic conditions.

Statement 3 is correct : The SLR is a tool that the RBI uses to control credit growth, liquidity, and inflation in the economy. By increasing or decreasing the SLR, the RBI can influence the amount of funds that banks can lend out, thereby affecting the overall money supply and credit growth.

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Statutory Liquidity Ratio (SLR)

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M Question 1	⏱ 0
With reference to the Statutory Liquidity Ratio (SLR), consider the following statements: 1. The SLR is maintained by commercial banks in the form of cash, gold, or other securities. 2. The Reserve Bank of India (RBI) prescribes the percentage of SLR that commercial banks must maintain. 3. The SLR requirement is used by the RBI as a tool to manage inflation and control the flow of credit in the economy. Which of the statements given above are correct? (a) 1 and 2 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3