SLR is Statutory Liquidity Ratio. 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.
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. Gold and G Secs (or Gilts) are included along with cash because they are highly liquid and safe assets.
The RBI can increase the SLR to contain inflation, suck liquidity in the market, to tighten the measure to safeguard the customers’ money. In a growing economy banks would like to invest in stock market, not in G Secs or Gold as the latter would yield less returns. One more reason is long term G Secs (or any bond) are sensitive to interest rate changes. But in an emerging economy interest rate change is a common activity.
You can find the latest rates from the RBI website itself. Here I am giving the link. Mouse over on reserve ratios (on Right hand side) to see SLR and CRR.
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Sathish Emmadi
Sathish Emmadi is a co-founder & editor at Lastbull.com. He is presently working in IT for one of the world’s top mutual fund companies. Handled multiple projects in BFSI (Banking,Financial Services and Insurance) domain. An Engineering Graduate from NITW.
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{ 19 comments… read them below or add one }
our site gives us lot of knowledge about all related topics.THANKS………!
may i knw wht is current CRR n SLR ???
Hi Deepika,
You can find the latest information from the RBI website itself. Here I am giving the link. Mouse over on reserve ratios (on Right hand side) to see SLR and CRR. Hope this helps. I would be updating my post to include this link so that any one can check latest rates.
http://www.rbi.org.in/home.aspx
Regards.
please tell me which situation affected the SLR rate?
what are the significance of SLR
Sanket
SLR stops banks from being over enthusiastic on credit. SLR ensures that banks do not provide all the deposits as loan. If they do this, any default by borrower will hurt the bank’s ability to pay its depositors.
Hi,
Can you please tell me what is SLR Returns/Earnings and how is it calculated? From where we can find out the prevailing SLR Returns/Earnings?
Rahul
Hi,
I want to know, how increase in repo rate will affect the interest rate of the loan already taken (Two months back).
Hi Satya,
RBI controls the base rates like repo rate. When RBI increases the base rates, the banks increase both lending and deposit rates.
Coming to loan amount, if you have taken a fixed rate personal loan the rate shouldn’t change with fluctuations in interest rates. If you have taken home loans/floating rate loans the interest rates get adjusted as per the current market.
comparative study of mutual fund, guide this topic and how to make a carrier in mutual fund
Hi Satish
I am very thankful to you for giving all these details in this site. It is very useful for me for the preparation of interview. thanks alot.
with regards
Hello,
I think SLR includes only ‘non-cash liquid assets’. Please clarify
warm regards,
thanku gaining gud knowledge………………..
but can u tel me why the slr rate is changed???
Dear Priyanka,
This was important to increase the liquidity in the market due to inflation and lower GDP. A change of 1% in the SLR will result into Estimate of Rs 60,000 Crore liquidity in the market, which will some
how compensate the inflation and GDP.
plz tell me the impact of decreased slr on indian economy
can any one please explain on the basis which SLR ratio increased and decreased by rbi?
please tell me what is the difference between SLR and CRR. what repo rate and reverse repo rate???
kindly help me to figure out this question….