Q. Which of the following differences between SLR and non-SLR investments is/are correct?

1. SLR investments are sovereign protected while non-SLR investments aren’t.
2. SLR investments are not risk-free while non-SLR are risk-free.

Choose the correct answer using the codes given below:
Answer: Only 1
Notes: Central banks mandate lenders to hold a portion of deposits in liquid assets, such as cash, gold, or government securities, known as the statutory liquidity ratio (SLR), currently set at 25%. SLR serves as a monetary policy tool aligned with policy objectives. Additionally, banks can invest in capital market instruments like stocks and bonds without compulsion. SLR investments in government bonds are considered risk-free due to sovereign protection, while non-SLR investments carry risk weights based on industry and perceived risk.