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Byju's Answer
Standard XII
Economics
Qualitative Instruments
Which of the ...
Question

Which of the following terms indicates mechanism used by commercial banks for providing credit to Government?

A
Cash Credit Ratio
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B
Debt Service Obligation
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C
Liquidity Adjustment Facility
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D
Statutory Liquidity Ratio
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Solution

The correct option is D Statutory Liquidity Ratio
Statutory Liquidity Ratio (SLR) is the mechanism used to by the RBI to regulate the liquidity of the commercial banks. Under SLR, commercial banks invest a certain percentage of their money in Government securities and other assets like gold so as to comply with RBI guidelines.

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