RBI's Statutory Liquidity Ratio (SLR) Policy
RBI's Statutory Liquidity Ratio (SLR): Key Update
Latest Release
April 9, 2025
Actual
18%
Previous
18%
Upon evaluating both the current macroeconomic conditions and their evolving nature, the Monetary Policy Committee (MPC) has resolved to modify the Statutory Liquidity Ratio (SLR) requirements by these assessments:
- The decision was taken by the Monetary Policy Committee (MPC) at its 54th meeting held from April 7 to 9, 2025.
- According to the recent announcement by the Reserve Bank of India, the Statutory Liquidity Ratio (SLR) percentage remains unchanged.
Historical RBI's Statutory Liquidity Ratio (SLR) Chart
Statutory Liquidity Ratio (SLR) Chart - Historical & Current Trends
Analyze SLR Changes Over Time
RBI's Statutory Liquidity Ratio (SLR) overview
SLR stands for Statutory Liquidity Ratio. The SLR means that the commercial banks have to maintain a specific percentage of their deposits in liquid assets, primarily government securities, gold, and cash.
Importance of Statutory Liquidity Ratio (SLR):
Maintaining liquidity: Similar to the Cash Reserve Ratio (CRR), the main goal of the SLR is to maintain liquidity in the banking system.
Preventing liquidation when CRR hikes: It also prevents commercial banks from excessively liquidating their liquid assets when the RBI raises the CRR.
Investment in govt securities: SLR inherently requires banks to invest a portion of their deposits in government securities.
Maintain credit flow: SLR is used by RBI to maintain credit flow into the banks.
Control inflation: When inflation goes up, the RBI increases the SLR. It forces the banks to allocate more funds to govt securities, thereby reducing the amount of money circulating in the economy and potentially curbing inflation. Conversely, reducing SLR increases liquidity with banks, which can stimulate economic growth.
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Important
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FAQs
What is the Statutory Liquidity Ratio (SLR) and how does it work?
SLR is a rule set by the RBI that requires banks to keep a certain percentage of their total deposits (NDTL) in liquid assets like cash, gold, or government-approved securities.
What is the difference between CRR and SLR?
CRR is the portion of cash that banks are required to keep with the RBI, and they don’t earn any interest on it. On the other hand, SLR is a reserve that banks maintain in the form of approved securities, like government bonds or gold, which can earn them returns. While CRR helps control liquidity, SLR plays a role in ensuring the bank’s stability and solvency.
How does a change in SLR affect the economy?
When the RBI increases the SLR, banks are required to keep more liquid assets, leaving them with less money to lend and helping to manage inflation. On the other hand, lowering the SLR gives banks more room to lend, which can stimulate growth but needs to be carefully managed to avoid inflationary pressures.
How is SLR calculated?
The Statutory Liquidity Ratio, or SLR, is shown as a percentage of a bank’s Net Demand and Time Liabilities (NDTL). It’s worked out using a simple formula: SLR = (Liquid Assets / NDTL) × 100. Liquid assets cover things like cash, gold, and approved securities that the bank keeps on hand.