Q. Consider the following statements about Statutory Liquid Ratio :
- The lower and upper limit of SLR is fixed in Indian economy
- SLR is regulated only under the RBI act 1934.
Which of the above is / are correct?
Answer:
None of the above
Notes: None of the above statements is correct. SLR & CRR are the reserves to be maintained by commercial banks in India under statutory provisioning norms. The impact of changes in SLR and CRR is that it either increases or decreases the money supply to commercial banks. This in turn affects lendable resource of banks. The ups and downs of money supply to market by the banks have direct effect on the economy of the country. SLR is changed only as per provisions of Banking Regulation Act, 1949.
- SLR rate = (liquid assets / (demand + time liabilities)) × 100%
This percentage is fixed by the Reserve Bank of India. The maximum limit for the SLR was 40% in India. Following the amendment of the Banking regulation Act (1949) in January 2017, the floor rate of 20.75% for SLR was removed. As on 28 February, 2019, the SLR is 19.25%.