Scheduled commercial banks are required to maintained statutory liquidity ratio in certain proportion of their net Demand and time liabilities ( Excluding liabilities subject to zero SLR) in the form of certain liquid assets under section 24 of Banking Regulation Act 1949. SLR has been introduced with a view to safe guard the interest of depositors as well as money supply in the economy.
SLR has been defined in detail in the Banking regulation act1949. It includes investment in cash and unencumbered approved securities. RBI is empowered to increase the SLR FOR SCHEDULED COMMERCIAL BANKS up to 40.
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