Question

What is SLR?

Hint:

SLR is used by central banks to control inflation, regulate credit, and ensure the liquidity of commercial banks.

Answer 1

Step 1: Understanding SLR.
SLR stands for Statutory Liquidity Ratio. It is the minimum percentage of a commercial bank's net demand and time liabilities (NDTL) that it must maintain in the form of liquid assets such as cash, gold, or government-approved securities. This ratio is set by the central bank, i.e., the Reserve Bank of India (RBI) in India.

Step 2: Conclusion.
Thus, SLR is a requirement that banks must fulfill to ensure liquidity and control credit expansion.