The Statutory Liquidity Ratio (SLR) is a regulatory requirement for banks in which they must maintain a certain percentage of their net demand and time liabilities in the form of liquid assets. These assets can include cash, gold, and government securities. The SLR is set by the central bank, such as the Reserve Bank of India, to ensure that banks have enough liquidity to meet their obligations and to promote financial stability. By mandating a minimum level of liquid assets, the SLR helps control the expansion of credit in the economy. A higher SLR means that banks have less money available for lending, which can help curb inflation. Conversely, a lower SLR allows banks to lend more, potentially stimulating economic growth.