When did India reach its record low Statutory Liquidity Ratio (SLR) of 18.00%?

Correct option is C

The correct answer is (c) November 2024

Explanation:

• India reached its record low Statutory Liquidity Ratio (SLR) of 18.00% in November 2024.
• This decision was taken by the Reserve Bank of India (RBI) as part of its monetary policy to inject liquidity into the banking system, encourage lending, and support economic activity amid global and domestic economic challenges.

Information Booster:

What is SLR (Statutory Liquidity Ratio)?

• It is the minimum percentage of a bank’s net demand and time liabilities (NDTL) that must be held in the form of liquid assets such as cash, gold, or approved government securities.
• SLR is mandated by the Reserve Bank of India (RBI) under Section 24 of the Banking Regulation Act, 1949.

Why is SLR Important?

• Maintains bank solvency.
• Helps control inflation and manage credit flow in the economy.
• Aids the government’s fiscal management by directing investment toward government securities.

SLR Trends:

• Over the decades, SLR has been gradually reduced to enhance banking sector efficiency.
• It was around 38.5% in the early 1990s.
• By November 2024, the SLR was brought down to a record low of 18.00%.