As per the Statutory Liquidity Ratio (SLR) norms, all SCBs (Scheduled Commercial Banks) shall maintain a uniform SLR on their total net demand and time liabilities (NDTL) in accordance with the method of valuation specified by the Reserve Bank of India from time to time. The SLR should be in the form of:
a) in cash, or
b) in gold valued at a price not exceeding the current market price, or
c) in unencumbered investment in the following instruments which will be referred to as “statutory liquidity ratio (SLR) securities”:
i. Dated securities of the Government of India
ii. Treasury Bills of the Government of India;
iii. Dated securities of the Government of India issued from time to time under the market borrowing programme and the Market Stabilisation Scheme;
iv. State Development Loans (SDLs) of the State Governments issued from time to time under their market borrowing programme; and
v. Any other instrument as may be notified by the Reserve Bank of India.
In most cases, the commercial banks are holding SLR in the form of government securities as the government securities will earn them a return in the form of interest payments.
