SLR (Statutory Liquidity Ratio)

The Statutory Liquidity Ratio (SLR) is the minimum percentage of a commercial bank's net demand and time liabilities (NDTL) that must be held in the form of liquid assets — primarily government securities (G-Secs), cash, or gold — as mandated by the Reserve Bank of India. Currently set at 18% of NDTL, SLR serves two purposes: it ensures that banks maintain a buffer of safe liquid assets to meet potential deposit withdrawal demands, and it guarantees a captive demand for government securities, supporting the government's borrowing programme. Changes in the SLR directly affect how much of a bank's resources can be deployed as loans to borrowers — a lower SLR releases more funds for lending, stimulating credit growth.