Multiple choice

To fulfill its SLR requirement, a bank, among others, can invest in approved securities. It refers to the securities

  1. u/s 12 of Banking Regulation Act

  2. u/s 20 of Indian Trust Act

  3. u/s 18 of Government Securities Act

  4. u/s 343 of the Companies Act
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

RBI fixes SLR (statutory liquidity ratio) from time to time – currently it is at 25%. RBI requires banks to maintain 25% of Net Demand and Time Liabilities (NDTL) which is to be maintained on daily basis by investment in cash (other than CRR) and unencumbered prescribed Central and State Government securities, treasury bills and Government Guaranteed Bonds. These securities are approved securities for SLR purposes under Section 24 of the Banking Regulation Act, 1949 and Indian Trust Act, 1882 and are issued under Public Debt Act, 1944.

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