What is SLR?

Statutory Liquidity Ratio is nothing but the amount which a bank has to maintain in the form of cash, gold or approved Govt. securities.

The quantum is specified as some percentage of the total demand and time liabilities of a bank. This Percentage is fixed by the Reserve Bank of India.

The main objectives for maintaining the Statutory Liquidity Ratio are the following:

• Statutory Liquidity Ratio is maintained in order to control the expansion of Bank Credit. By changing the level of Statutory Liquidity Ratio, Reserve bank of India can increase or decrease bank credit expansion.
• Statutory Liquidity Ratio in a way ensures the solvency of commercial banks.
• By determining Statutory Liquidity Ratio, Reserve Bank of India, in a way, compels the commercial banks to invest in government securities like government bonds.

Source: Finance.mapsofworld|Wikipedia