💡 SLR (Statutory Liquidity Ratio) 💡
The Statutory Liquidity Ratio is the minimum portion of deposits that a commercial bank must keep in the form of cash, gold, or other securities. In summary, it is the minimum amount of reserves that banks must hold in order to extend credit to customers. The SLR is fixed by the central banks and is a form of control over the credit growth in the country.
The SLR is a tool used by the central banks to control inflation and promote growth. While lowering the SLR will lead to economic growth, raising the SLR will help control inflation.