Statutory Liquidity Ratio refers to minimum percentage of net demand and time liabilities which commercial banks are required to maintain with themselves.
According to Legal Reserve requirements, commercial banks are obliged to maintain reserves.
in the form of CRR (Cash Reserve Ratio) and SLR (Statutory Liquidity Ratio)
Cash Reserve Ratio:-
It refers to the minimum percentage of net demand and time liabilities, to be kept by commercial banks to create the credit.
For instance, an increase in CRR reduces the excess reserves of commercial banks and limits their credit-creating power.