ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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 FINANCIAL SYSTEM Arguing about SLR THE concept of the Statutory Liquidity Ratio (SLR) was first introduced by the Banking Regulation Act for enforcing discipline on banks and affording protection to custodiers' deposits. A new dimension was added to the SLR when later it began to be used as an instrument of monetary policy. After 1970. however, the SLR is being used increasingly to raise resources for the budget by creating a captive market for government securities and government- guaranteed securities issued by agencies like the state electricity boards and financial institutions. Guaranteed securities issued by these government- owned institutions also indirectly provide budgetary support to the government since providing resources for these bodies is essentially a responsibility of the Central and state governments.

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