RAS question
Statutory Liquidity Ratio (SLR) can be maintained in the form of:
Correct answer: (A) Cash, gold, or approved government securities.
Statutory Liquidity Ratio can be maintained in the form of cash, gold, or approved government securities.
Explanation
SLR is the minimum share of a bank's deposits that must be kept in liquid assets before the bank extends credit. The RBI primer supports the standard exam formulation: the liquid assets for this requirement are cash, gold, or unencumbered investment in approved securities. That is why option A is complete. It includes cash for immediate liquidity, gold as an eligible liquid asset, and approved government securities as the recognised securities component. The same RBI source also treats some non-government debt, such as corporate bonds, as non-SLR securities, so adding corporate bonds changes the category and makes the option wrong.
Why the other options are wrong
- (B) Corporate bonds do not fit the SLR form stated in the question, and the RBI primer treats corporate bonds as non-SLR securities rather than approved SLR assets.
- (C) SLR is not confined to cash because the eligible liquid assets also include gold and approved securities.
- (D) Government securities alone are incomplete because cash and gold are also valid forms for maintaining SLR.
Concept
This tests monetary policy and banking regulation, especially the difference between CRR-style cash reserves and SLR-style liquid asset holdings. It recurs in RAS because SLR links bank liquidity, credit creation, and the government securities market in one compact concept.