RBI says will cut SLR gradually to 18% by mid-2019

The RBI has decided to reduce statutory liquidity ratio, the portion of funds which banks are required to park in treasury bills and other instruments, by 0.25 per cent every quarter beginning January.

The calibrated reduction in statutory liquidity ratio (SLR) will continue till it reaches 18 per cent. The current SLR is 19.5 per cent.

"This reduction in SLR holding is likely to free up Rs 1-1.5 trillion of funds in the next one and half year into the banking system," said Rajni Thakur, onomist, RBL Bank.

In the 'Statement on Developmental and Regulatory Policies' post announcing its fifth bi-monthly monetary policy