Plan panel report says strong case for gradual cut in banks' SLR

[K.Karthik Raja]

Plan panel report says strong case for gradual cut in banks' SLR
Wednesday, Apr 2

NEW DELHI - A Planning Commission panel today said there was a
strong case
for a gradual cut in the statutory liquidity ratio maintained by banks
from
the current 25%.
"With the moderation in the fiscal deficit and government's
borrowing
requirements and the overall improvement in the efficiency and health
of the
financial system since the 1990s, there is a strong case for gradual
reduction
in SLR, in line with other markets," the High-Level Group on Services
Sector
said.
Currently, banks have to keep 25% of their net demand and time
liabilities
in government securities as SLR requirement.
Last year, the government amended the Banking Regulation Act to
give the
Reserve Bank of India the freedom to specify the SLR to be maintained
by banks.
The group, headed by Planning Commission Member Anwarul Hoda, also
favoured alignment of banks' cash reserve ratio over time, with an
appropriate
globally benchmarked level. More
.
K.Karthik Raja