Statutory liquidity ratio implies to that percentage of ____ .
Statutory liquidity ratio implies to that percentage of ____ .
(a) Total deposits of the commercial banks which must be kept in the current account, with the Reserve Bank of India.
(b) Total deposits of the commercial banks which must be kept in the form of liquid assets, with the Reserve Bank of India.
(c) Net time and demand deposit liabilities of the commercial banks which must be kept in the form of cash, with the Reserve Bank of India.
(d) Net time and demand deposit liabilities of the commercial bank which must be kept with themselves in the form of liquid assets.
Anurag Pathak Changed status to publish December 26, 2023
Ans – (d)
Explanation:-
Statutory Liquidity Ratio (SLR):
It refers to a minimum percentage of net demand and time liabilities that commercial banks are required to maintain with themselves.
SLR is maintained in the form of designated liquid assets such as excess reserve, unencumbered, government and other approved securities or current account balances with other banks.
Change in SLR affects the freedom of banks to sell government securities or borrow against them from the Central Bank.
An increase in SLR reduces the ability of banks to give credit and vice-versa.
The Reserve Bank can influence the credit creation power of the banks by making changes in CRR or/and SLR.
Unencumbered securities refer to those securities which are not acting as security for loans from the Central Bank.
Approved securities refer to those securities whose repayment is guaranteed by the government.
Anurag Pathak Changed status to publish December 26, 2023
