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Statutory Liquidity Ratio (SLR)
The statutory liquidity ratio requires banks to keep a set percentage of their deposits in liquid, safe assets, mostly government securities. Unlike the CRR, this money does earn interest, but it cannot be lent to businesses or households.
Why It Matters
The SLR is one reason Indian banks are among the largest buyers of government debt.
In India
Because banks must hold government bonds under the SLR, part of every savings deposit in India ends up financing the government’s borrowing.