SLR is the _________.
SLR is the _________.
The correct option is C percentage of total deposit that commercial bank is themselves
Statutory
Liquidity Ratio (SLR) refers to liquid assets i.e. cash which the commercial
banks must hold with themselves on a daily basis as a portion of their total
deposits. The ratio is determined by the central bank of the country and is used as a credit control measure in the economy.
By increasing
the statutory liquidity ratio, the commercial banks has to maintain more cash
with themselves which reduces their credit creation capacity and
therefore money supply in the economy also reduces which corrects the situation
of inflation and by decreasing
the statutory liquidity ratio, the commercial banks has to maintain less cash
with themselves which increases their credit creation capacity and
therefore money supply in the economy also increases which corrects the
situation of deflation.
Statutory Liquidity Ratio (SLR) refers to liquid assets i.e. cash which the commercial banks must hold with themselves on a daily basis as a portion of their total deposits. The ratio is determined by the central bank of the country and is used as a credit control measure in the economy.
By increasing the statutory liquidity ratio, the commercial banks has to maintain more cash with themselves which reduces their credit creation capacity and therefore money supply in the economy also reduces which corrects the situation of inflation and by decreasing the statutory liquidity ratio, the commercial banks has to maintain less cash with themselves which increases their credit creation capacity and therefore money supply in the economy also increases which corrects the situation of deflation.
