The Banking Regulation Act, 1949 is a key Act to

Solution

Section 24 of the Banking Regulation Act, 1949 requires the scheduled commercial banks to maintain minimum proportion of their Net Demand and Time Liabilities (NDTL) as liquid assets in the form of cash, gold and un-encumbered approved securities. This is referred to as the Statutory liquidity Ratio (SLR). Furthermore, under MSF window, banks can avail overnight, up to 2% of their respective NDTL outstanding at the end of the second preceding fortnight. In the event, the banks’ SLR holdings fall below the statutory requirement up to 2% of their NDTL, banks will not have the obligation to seek a specific waiver for default in SLR compliance arising out of use of this facility in terms of notification issued under sub section (2A) of Section 24 of the Banking Regulation Act, 1949.