Shielding banks with the antiquated ‘statutory liquidity ratio’ only breeds complacency, abolish it

Dear Sanjay Malhotra,

As , you have sprung a surprise or two. When you cut the repo rate by 50 bps in June, instead of the usual 25 bps, many cheered your boldness and unconventional thinking. Indeed, one incisive analyst declared that only a person without a PhD in economics could have had the guts to do a 50-point cut.

May I suggest an even bolder and more unconventional move. Please abolish the (SLR). SLR obliges banks to hold a prescribed ratio (currently 18%) of their assets in the form of gold or government bonds, effectively the latter. No modern economy has anything of this sort.

If India wishes to become ‘Viksit Bharat’, it must modernise its monetary system too. If you abolish SLR in one go, too many people, including some Cabinet........

© Swaminomics