Question
What the true about SLR (statutory Liquidity Ratio)?
i. The SLR is determined by a percentage of net demand and time liabilities ii. These are investment in form of gold and government approved securities iii. RBI uses SLR as a monetary tool to control the inflation and decreases SLR when inflation is highSolution
RBI will increase (not decrease) SLR to control high inflation. Increase in SLR will reduce the money supply in the system.
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