The banks are required to maintain a certain ratio between their cash in hand and total assets. This ratio is known as :
Cash Reserve Ratio (CRR)
Statutory Liquidity Ratio (SLR)
Central Bank Reserve (CBR)
Statutory Bank Ratio (SBR)
Answer is Wrong!
Answer is Right!
This question was previously asked in
UPSC CAPF – 2023
Banks in India are required to maintain certain ratios as per regulations by the Reserve Bank of India (RBI). The Statutory Liquidity Ratio (SLR) is the ratio of a bank’s liquid assets (including cash in hand/vault cash, gold, and unencumbered approved government securities) to its Net Demand and Time Liabilities (NDTL). While the question asks for a ratio between cash in hand and total assets, which is not a directly mandated standalone ratio by name, SLR is the key regulatory ratio that requires banks to hold liquid assets, *including cash in hand*, relative to their liabilities. Vault cash held by banks contributes to meeting the SLR requirement. Therefore, among the given options, SLR is the ratio most directly related to the requirement for banks to hold liquid assets, including cash in hand, even if the denominator mentioned in the question (“total assets”) is not precisely NDTL.
SLR is a required ratio that mandates banks to hold a certain percentage of their NDTL in liquid assets, including cash in hand (vault cash), gold, and approved securities.