The Hindu Business Line : Kalam gives assent to SLR Ordinance

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New Delhi Jan. 23 The President, Mr A.P.J. Abdul Kalam, has given his assent to an Ordinance that would empower the Reserve Bank of India to lower the statutory liquidity ratio (SLR) below 25 per cent.

An official spokesperson of the Government confirmed that the Ordinance has been promulgated. With this, the RBI would get more operational flexibility in the conduct of monetary policy and could peg the SLR anywhere from 0 per cent to 40 per cent.

Under the present requirement, banks have to keep at least 25 per cent of their net demand and time liabilities (i.e. deposits) in the form of liquid assets comprising cash, gold and approved securities, mainly government bonds. Any move to lower SLR would allow banks to offer more credit to industry.

The timing of the issuance of the Ordinance assumes importance, as the RBI is to come up with its quarterly credit and monetary policy review on January 31.

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