Under Section 24 of the Banking Regulation Act, 1949, every banking company must maintain in India in cash, gold or unencumbered approved securities an amount which shall not at the close of business on any day be less than a prescribed percentage of its total demand and time liabilities. What is the statutory maximum of this percentage?

Section 24 of the Banking Regulation Act, 1949 requires a banking company to maintain in India assets in the form of cash, gold or unencumbered approved securities of a value which shall not be less than such percentage of its demand and time liabilities as may be prescribed, and the section caps the requirement at forty per cent of those liabilities. The Reserve Bank fixes the actual statutory liquidity ratio within this ceiling, and failure to maintain the required assets attracts penal interest under the same provision. The cash reserve ratio under Section 42(1) of the Reserve Bank of India Act, 1934 is a separate requirement maintained with the Reserve Bank itself and ranges between three and fifteen per cent. Figures below forty per cent represent current operating levels rather than the statutory maximum.