Financial Repression Tracker

Rules that steer savings into government debt or hold returns below inflation, country by country.

Steer · Captive demand

Statutory liquidity ratios met with government securities

What it is
A legal minimum share of bank deposit liabilities that must be held in a defined list of 'liquid' or 'approved' assets, in practice dominated by Treasury bills and government bonds; also run as banks' 'investment coefficients' with a mandatory public-funds tranche.
Why it counts
Banks become a captive buyer base for government paper regardless of yield, so the state borrows below market rates out of depositors' money.

When it was in force

  • India: 2021 → now, in force; the rule may be older than the cited document
  • Bangladesh: 2010, historical; the rule may be older than the cited document; its end is not documented
  • United Kingdom: 1971, historical; the rule may be older than the cited document; its end is not documented
  • Spain: 1971 → 1983, historical; the rule may be older than the cited document; its end is not documented

4 examples

  1. India

    2021 → nowIn force

    The rule may be older than the cited document · As cited: 2021-present (current Master Direction; SLR itself is far older)

    Banks must hold 'SLR assets' (approved government securities and other eligible assets) of at least 18% of net demand and time liabilities, with a statutory ceiling of 40%.

    Reserve Bank of India Master Direction on CRR and SLR, 2021, paras 13-14 (under Section 24 of the Banking Regulation Act, 1949)Primary source
    “shall maintain in India assets (hereinafter referred to as ‘SLR assets’) the value of which shall not, at the close of business on any day, be less than 18 per cent”

    rbi.org.in (opens in a new tab)Checked: quote matched on the page by script

    India today: index 60.6

  2. Bangladesh

    2010Historical

    The rule may be older than the cited document · Its end is not documented

    Bangladesh Bank set the statutory liquidity ratio (including cash balances with Bangladesh Bank) for scheduled banks at not less than 19% of demand and time liabilities (11.5% for Islamic Shariah-based banks/windows), effective 15 December 2010.

    Bangladesh Bank MPD Circular No. 05 of 1 December 2010, under Section 33 of the Bank Company Act, 1991Primary source
    “the amount of Statutory Liquidity Ratio (SLR) including cash balances with Bangladesh Bank required to be maintained by the banking companies shall not be less than 19.00 (nineteen) percent”

    bb.org.bd (opens in a new tab)Checked: quote matched on the page by script

  3. United Kingdom

    1971Historical

    The rule may be older than the cited document · Its end is not documented

    The Bank proposed that all banks hold a minimum ratio of 'reserve assets', comprising mainly Bank of England balances, Treasury bills, call money and gilts with a year or less to run, replacing the clearing banks' earlier cash and liquidity ratio agreements.

    Bank of England, 'Competition and Credit Control' consultative document of 14 May 1971 (minimum reserve assets ratio replacing the clearing banks' cash and liquidity ratios)Primary source
    “The proposal that all banks should observe a minimum reserve assets ratio is intended to provide the authorities with a known firm base for the operation of monetary policy”

    bankofengland.co.uk (opens in a new tab)Checked: quote matched on the page by script

    United Kingdom today: index 44.4

  4. Spain

    1971 → 1983Historical

    The rule may be older than the cited document · Its end is not documented · As cited: 1971-1983 (as shown by the cited orders)

    Private banks had to keep a minimum share of deposits in public funds and special credits; the 1983 order put the whole increase into the public-funds tranche (13.5% minimum for commercial banks).

    Coeficiente de inversión of private banks (Ley 13/1971, disposición adicional cuarta); Orden de 20 de diciembre de 1983 raising it by 0.5 pointsPrimary source
    “Se eleva en 0,5 puntos el coeficiente de inversión que la Banca privada está obligada a mantener en relación con sus depósitos”

    boe.es (opens in a new tab)Checked: quote matched on the page by script

    Spain today: index 48.0

Examples and their dates reviewed .

Further reading

12 more on captive demand