The Statutory Liquidity Ratio (SLR) is calculated using the following formula:
SLR = (Total Liquid Assets / Net Demand and Time Liabilities) * 100
Here, "Total Liquid Assets" refers to the liquid assets held by banks, such as cash, gold, government securities, and other approved securities. These assets are readily convertible into cash without significant loss in value.
"Net Demand and Time Liabilities" (NDTL) represents the total deposits of a bank, including demand deposits (current and savings accounts) and time deposits (fixed deposits) of customers, minus the deposits held by other banks. NDTL represents the liabilities of the bank towards its customers.
The SLR is expressed as a percentage, indicating the proportion of a bank's NDTL that must be maintained in the form of liquid assets. The percentage is determined by the central bank or regulatory authority of the country and may vary over time based on monetary policy objectives and economic conditions.
It's important to note that the specific components and calculation methodology of SLR may vary across different countries and regulatory frameworks. The formula provided here represents a general formula commonly used for SLR calculation.