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The portion of total deposit which a commercial bank has to keep with itself in liquid assets is known as
- a)CRR
- b)SLR
- c)REPO
- d)Reverse REPO
Correct answer is option 'B'. Can you explain this answer?
Verified Answer
The portion of total deposit which a commercial bank has to keep with ...
SLR means liquid statutory ratio. Every bank has to keep that amount of money every time. because customers can withdrew money any time. Bank can not give that money on loan or for any other purpose.
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The portion of total deposit which a commercial bank has to keep with ...
SLR is right answer. SLR means liquid statutory ratio. Every bank has to keep that amount of money every time. because customers can withdrew money any time. Bank can not give that money on loan or for any other purpose.
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The portion of total deposit which a commercial bank has to keep with ...
SLR (Statutory Liquidity Ratio)
The Statutory Liquidity Ratio (SLR) is the portion of total deposit that a commercial bank is required to maintain with itself in liquid assets such as cash, gold, government securities, etc. SLR is mandated by the central bank of a country (in India, it is the Reserve Bank of India) as a regulatory measure to ensure the stability of the banking system and control the expansion of credit.
Importance of SLR
1. Liquidity Management: SLR helps banks manage their liquidity by ensuring that they have enough liquid assets to meet the withdrawal demands of depositors.
2. Financial Stability: By maintaining a certain proportion of their deposits in liquid assets, banks can protect themselves from liquidity crises and maintain financial stability.
3. Credit Control: SLR acts as a tool for the central bank to control the expansion of credit in the economy. By adjusting the SLR requirement, the central bank can influence the lending capacity of banks.
Calculation of SLR
SLR is calculated as a percentage of a bank's Net Demand and Time Liabilities (NDTL). NDTL includes demand and time deposits of the bank's customers. The current SLR requirement in India is 18%.
In conclusion, SLR plays a crucial role in ensuring the stability of the banking system and controlling the credit expansion in the economy. Commercial banks must adhere to the SLR requirement set by the central bank to maintain liquidity and financial stability.
The Statutory Liquidity Ratio (SLR) is the portion of total deposit that a commercial bank is required to maintain with itself in liquid assets such as cash, gold, government securities, etc. SLR is mandated by the central bank of a country (in India, it is the Reserve Bank of India) as a regulatory measure to ensure the stability of the banking system and control the expansion of credit.
Importance of SLR
1. Liquidity Management: SLR helps banks manage their liquidity by ensuring that they have enough liquid assets to meet the withdrawal demands of depositors.
2. Financial Stability: By maintaining a certain proportion of their deposits in liquid assets, banks can protect themselves from liquidity crises and maintain financial stability.
3. Credit Control: SLR acts as a tool for the central bank to control the expansion of credit in the economy. By adjusting the SLR requirement, the central bank can influence the lending capacity of banks.
Calculation of SLR
SLR is calculated as a percentage of a bank's Net Demand and Time Liabilities (NDTL). NDTL includes demand and time deposits of the bank's customers. The current SLR requirement in India is 18%.
In conclusion, SLR plays a crucial role in ensuring the stability of the banking system and controlling the credit expansion in the economy. Commercial banks must adhere to the SLR requirement set by the central bank to maintain liquidity and financial stability.
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The portion of total deposit which a commercial bank has to keep with itself in liquid assets is known asa)CRRb)SLRc)REPOd)Reverse REPOCorrect answer is option 'B'. Can you explain this answer?
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The portion of total deposit which a commercial bank has to keep with itself in liquid assets is known asa)CRRb)SLRc)REPOd)Reverse REPOCorrect answer is option 'B'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about The portion of total deposit which a commercial bank has to keep with itself in liquid assets is known asa)CRRb)SLRc)REPOd)Reverse REPOCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The portion of total deposit which a commercial bank has to keep with itself in liquid assets is known asa)CRRb)SLRc)REPOd)Reverse REPOCorrect answer is option 'B'. Can you explain this answer?.
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