RBI says that it will reduce the statutory liquidity ratio by 0.25 percent every quarter beginning January next year

The Reserve Bank today said that it will reduce the statutory liquidity ratio by 0.25 percent every quarter beginning January next year.

Statutory Liquidity Ratio – SLR – is the portion of funds which banks are required to maintain in the form of cash, gold reserves, the government approved securities before providing credit to the customers.

In a statement, RBI said the reduction will continue until it reaches 18 per cent from the current 19.5 percent. The move is likely to release funds locked in government securities and add to lendable liquidity.

In order to improve liquidity management by banks, RBI has said that it will release the CRR figure of banks to market participants on the very next day.

Currently, the cash reserve ratio balance of banks is disclosed with a lag of 2-3 days, while the details of the currency in circulation are being released with a lag of one.

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