Statutory Liquidity Ratio (SLR)
Statutory Liquidity Ratio (SLR)
0.25% on Apr 13, 2019 | 1 Yr ago | 5 Yr ago | 10 Yr ago |
| 19.25% | 22.00% | 25.00% |
Major Monetary Policy Rates And Reserve Requirements
Chart of Statutory Liquidity Ratio (SLR)
Current SLR Rate
The current Statutory Liquidity Ratio (SLR) is 19.00%
. The Statutory Liquidity Ratio (SLR) last witnessed a change in its level on April 13, 2019 when it declined by 0.25% from its previous level of 19.25%.As of today, i.e. on January 18, 2020, the Policy Rates which include Repo Rate stood at 5.40%, Reverse Repo Rate at 5.15%, Marginal Standing Facility (MSF) Rate at 5.65% and Bank Rate at 5.65%. The Reserve Ratios which include Cash Reserve Ratio (CRR) stood at 4.00% and the Statutory Liquidity Ratio (SLR) at 19.00%, according to data of Major Monetary Policy Rates and Reserve Requirements released by the Reserve Bank of India.
Statutory Liquidity Ratio (SLR) Comparision Chart
What is Statutory Liquidity Ratio (SLR)?
SLR means the ratio of specified securities banks must maintain in relation to their Demand and Time Liabilities (DTL), as prescribed by the central bank.
Main Objectives of SLR are:
- SLR (Statutory Liquidity Ratio) is a tool which aids the RBI to ensure the solvency a commercial bank.
- SLR helps to control the expansion of Bank Credits. By changing the SLR rates, RBI can increase or decrease bank credit expansion.
- Through SLR, the Central Bank compels the commercial banks to invest in government securities.
- SLR (like CRR) is a tool of monetary policy to control money supply in the economy. Lower SLR rates releases liquidity into the system, as banks require to hold less government bonds and vice versa.
Statutory Liquidity Ratio (SLR) in India
Statutory Liquidity Ratio is prescribed under Section 24 of the Banking Regulation Act, 1949.
Current Level
Reserve Bank has specified that every SCB shall continue to maintain in India specified assets, the value of which shall not, at the close of business on any day, be less than 19.00 per cent of the total NDTL (not exceeding 40 per cent of its total DTL) as on the last Friday of the second preceding fortnight.
Specified Assets for SLR
- Cash or
- Gold valued at a price not exceeding the current market price, or
- Investment in the following instruments which are referred to as "Statutory Liquidity Ratio (SLR) securities":
- Dated securities issued up to May 06, 2011;
- Treasury Bills of the Government of India;
- Dated securities of the Government of India issued from time to time under the market borrowing programme and the Market Stabilization Scheme;
- State Development Loans (SDLs) of the State Governments issued from time to time under the market borrowing programme; and
- Any other instrument as may be notified by the Reserve Bank of India.
Procedure for Computation of SLR
The procedure to compute total NDTL for the purpose of SLR under Section 24 (2A) of Banking Regulation Act, 1949 is broadly similar to the procedure followed for CRR except that there are no exemption on certain liabilities as prescribed for maintenance of CRR.
The value of SLR assets and NDTL are valued in accordance with the method of valuation specified by the Reserve Bank of India from time to time.
Maintenance of SLR on Daily Basis
Unlike CRR, RBI does not permit any flexibility in the maintenance of SLR, i.e., SLR has to be maintained at 100% level (or higher) on a daily basis.
Penalties
If a banking company fails to maintain the required amount of SLR, it shall be liable to pay to RBI in respect of that default, the penal interest for that day at the rate of three per cent per annum above the Bank Rate on the shortfall and if the default continues on the next succeeding working day, the penal interest may be increased to a rate of five per cent per annum above the Bank Rate for the concerned days of default on the shortfall.
Return in Form VIII (SLR)
- Banks should submit to the Reserve Bank before 20th day of every month, a Return in Form VIII showing the amounts of SLR held on alternate Fridays during immediate preceding month with particulars of their DTL in India held on such Fridays or if any such Friday is a public holiday under the Negotiable Instruments Act, 1881, at the close of business on preceding working day.
- Banks should also submit a statement as Annexure to Form VIII Return giving daily position of (a) assets held for the purpose of compliance with SLR, (b) excess cash balances maintained by them with RBI in the prescribed format, and (c) mode of valuation of securities.
The Federal Reserve has a responsibility to ensure the safety and soundness of financial institutions and to contain systemic risks in financial markets.
~ Bernie Sanders