Multiple choice

The banks are required to maintain a certain ratio between their cash in hand and total assets. What is this known as?

  1. SLR (Statutory Liquidity Ratio)

  2. CLR (Central Liquidity Ratio)

  3. SBR (Statutory Bank Ratio)

  4. None of these

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A Correct answer
Explanation

The Statutory Liquidity Ratio (SLR) is the reserve requirement that banks must maintain in the form of cash, gold, or approved securities before extending credit to customers. It's a regulatory tool used by the Reserve Bank of India to control money supply and ensure bank liquidity. The ratio is prescribed as a percentage of a bank's demand and time liabilities.

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