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Welcome to our lesson on Statutory Liquidity Ratio (SLR), a key term in the world of finance. As a knowledgeable professor, let me break it down for you. Essentially, SLR refers to the minimum amount of deposits that a commercial bank is required to hold in its reserves. These reserves can include cash, gold, or other securities. Why is this important? Well, it acts as a safety net for banks before they can lend money to customers. By maintaining this reserve requirement, banks can ensure the stability and security of the banking system. So, the next time you hear about SLR, you'll know exactly what it means.
