The banks are required to maintain a certain ratio between their cash in hand and total assets. This is called

SLR or the Statutory Liquidity Ratio is that ration of total deposits which a commercial bank has to maintain with itself at any given point of time in the form of liquid assets like cash in hand, current balances with other banks and first class securities which can be turned into cash (gold, cash or other approve securities). Some assets have to be in liquid form to take care of financial emergencies which every bank has to face. It regulates the credit growth in India.