Answer: Option D
Answer: (d)
Statutory Liquidity Ratio refers to the amount that the commercial banks require to maintain in the form of gold or government approved securities before providing credit to the customers.
Hereby approved securities we mean, bonds and shares of different companies. The statutory Liquidity Ratio is determined and maintained by the Reserve Bank of India in order to control the expansion of bank credit.
Statutory liquidity ratio is the number of liquid assets such as precious metals (Gold) or other approved securities, that a financial institution must maintain as reserves other than the cash.
In a growing economy, banks would like to invest in the stock market, not in Government Securities or Gold as the latter would yield fewer returns. One more reason is long term Government Securities (or any bond) are sensitive to interest rate changes. But in an emerging economy interest rate change is a common activity.