SLR-(Statutory Liquidity Ratio)
SLR is a portion of banks Net Demand and Time liabilities (NDTL) that Scheduled Commercial Banks are required to maintain with themselves in form of Cash, Gold, Government Bonds or unencumbered approved securities at closing of any business day. RBI allows banks to invest in gold and government bond because these are safe and highly liquid. This tool regulates credit growth in country. RBI can increase it up to 40% of NDTL and can reduce up to 25 %.This monetary tool is used by the RBI to ensure sufficient liquidity with banks. An increase in SLR by RBI will put a restriction on banks lending capacity. By doing this RBI ensures that customers can get their money as and when they demand