SSC GD 2024 PYQ — Question 31

The correct answer is option 1 i.e. It's the percentage of deposits that banks must keep in liquid form in the short term.

• The Statutory Liquidity Ratio (SLR) is the minimum percentage of a commercial bank's net demand and time liabilities (NDTL) that it must maintain in the form of liquid assets, such as cash, gold, or government-approved securities (like government bonds or Treasury Bills). SLR is also used by the RBI as a tool to control inflation and money supply in the economy.
• This requirement is set by the Reserve Bank of India (RBI) and is aimed at ensuring that banks have enough liquidity to meet their obligations and to provide stability to the financial system. It ensures that banks have enough assets to meet their short-term obligations and reduces the risk of a bank default.