SLR Rate: Indian SLR Rate Defined

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SLR Rate

SLR (Statutory Liquidity Ratio) is the amount a commercial bank needs to maintain in the form of cash, or gold or govt. approved securities (Bonds) before providing credit to its customers. SLR rate is determined and maintained by the RBI (Reserve Bank of India) in order to control the expansion of bank credit. What is current SLR rate by RBI? Presently, the SLR is 25 in the RBI policy review on 27 October, 2009.

Statutory Liquidity Ratio is the amount of liquid assets, such as cash, precious metals or other short-term securities, that a financial institution must maintain in its reserves. The statutory liquidity ratio is a term most commonly used in India.

SLR is used to control inflation and propel growth. Through SLR rate tuning the money supply in the system can be controlled efficiently.

SLR Rate = Total Demand/Time Liabilities x 100%

This percentage is fixed by the Reserve Bank of India. The maximum and minimum limits for the SLR are 40% and 25% respectively.Following the amendment of the Banking regulation Act(1949) in January 2007, the floor rate of 25% for SLR was removed. Presently, the SLR is 25% with effect from 7 November 2009. It was raised from 24% in the RBI policy review on 27 October 2009.