What is Statutory Liquidity Ratio(SLR) ?

Statutory Liquidity Ratio refers to the amount that the commercial banks require to maintain in the form of cash, or gold or govt. approved securities before providing credit to the customers.


It’s the percentage of  Demand and Time Maturities  that banks need to have in any or combination of the following forms:

i) Cash
ii) Gold valued at a price not exceeding the current market price,
iii) Unencumbered approved securities (G Secs or Gilts come under this) valued at a price as specified by the RBI from time to time (Here by approved securities we mean, bond and shares of different companies).

Time Liabilities refer to the liabilities, which the commercial banks are liable to pay to the customers on there anytime demand.

SLR is determined and maintained by the Reserve Bank of India.

The maximum limit of SLR is 40% and minimum limit of SLR is 24%. It’s 24% now. This restriction is imposed by RBI on banks to make funds available to customers on demand as soon as possible.

Current Rate: 24%

Why is SLR changed from time to time?

  • The RBI can increase the SLR to contain inflation, suck liquidity in the market, to tighten the measure to safeguard the customers’ money.
  • In order to control the expansion of bank credit.


Practical Example:

(Based on current rates)
If you deposit Rs. 1000/- in bank, CRR being 4.75% and SLR being 24%, then bank can use 1000-47.5-240= Rs. 712.5/- for giving loan or for investment purpose.

Difference between SLR and CRR(Cash Reserve Ratio)

  • SLR restricts the bank’s leverage in pumping more money into the economy.

CRR is the portion of deposits that the banks have to maintain with the RBI. Higher the ratio, the lower is the

amount that banks will be able to use for lending and investment.

  • To meet SLR, banks can use cash, gold or approved securities.
    CRR has to be only cash.
  • CRR is maintained in cash form with RBI, where as SLR is maintained in liquid form with banks themselves.




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