Understanding SLR and non-SLR investments in Banks: TIRM Exam Guide (2026)

Every bank in India must park a slice of its deposits in specific safe assets before it can chase profit anywhere else, and understanding SLR and non-SLR investments is exactly what separates a candidate who guesses on the exam from one who scores full marks on this topic. This single idea — how much a bank MUST hold versus how much it CHOOSES to hold — sits at the core of every treasury desk's balance sheet and shows up repeatedly in TIRM papers.

📊 What Are SLR Investments?

SLR, or Statutory Liquidity Ratio, is a legal obligation under Section 24 of the Banking Regulation Act, 1949. Every scheduled commercial bank must invest a prescribed percentage of its Net Demand and Time Liabilities (NDTL) in cash, gold, and RBI-approved securities — chiefly dated Central Government securities, State Development Loans, and Treasury Bills. As per RBI's extant guidelines, the SLR is currently maintained at 18% of NDTL, a figure that has been progressively eased down from the 25%+ levels seen before the 1991 liberalisation era. This is a statutory floor, not a suggestion — falling short attracts penal action from the regulator. Candidates preparing chapter-wise material on financial markets will find this concept threaded through the Financial Markets chapter, where the government securities market and its role in SLR compliance is explained in depth. SLR securities also double up as the collateral banks pledge for repo borrowing from RBI, which is why treasury managers treat this portfolio as the bedrock of liquidity management rather than a return-generating book. Because SLR assets are sovereign or sovereign-guaranteed, they carry near-zero credit risk, and banks are permitted to hold them at book value for statutory computation purposes without the volatility concerns that plague riskier instruments.

💵 What Are Non-SLR Investments?

Once a bank has satisfied its statutory SLR requirement, any further investment it makes is classified as a non-SLR investment. These are discretionary holdings undertaken to earn a better return, diversify the balance sheet, or meet business needs that go beyond regulatory compliance. Typical non-SLR instruments include corporate bonds and debentures, equity shares, units of mutual funds, commercial paper, certificates of deposit issued by other banks, and instruments issued by financial institutions. Unlike SLR holdings, non-SLR investments carry credit risk, liquidity risk, and market risk in varying degrees, so RBI prescribes prudential exposure ceilings — for instance, limits on unrated or unlisted non-SLR investments and board-approved policies governing the quality and tenor of such holdings. The distinction matters enormously for exam purposes: SLR and non-SLR investments together make up a bank's total investment portfolio, but only the SLR portion counts toward statutory compliance. A bank's treasury desk actively manages the non-SLR book to squeeze out incremental yield while staying within RBI's prudential and internal board-approved limits, since aggressive non-SLR exposure without adequate risk controls has historically been a cause of stress in a few banks' balance sheets.

💡 Exam Tip: If a question asks which securities are "eligible for SLR," the safe default answer is Central/State Government securities, Treasury Bills, and gold — not corporate bonds or equity, which always fall in the non-SLR bucket.

⚖️ SLR vs Non-SLR: Key Differences

The cleanest way to lock this topic in before the exam is a side-by-side comparison. Both categories sit inside a bank's investment book, but they answer completely different questions — one is about survival and compliance, the other is about growth and return. The table below captures the distinctions IIBF examiners test most often when they frame questions around SLR and non-SLR investments.

⚠️ Common Mistake: Students often assume CRR and SLR are interchangeable. CRR is held in cash with RBI and earns no return at all, while SLR assets can be interest-bearing government securities — treat them as two separate statutory ratios with different holding forms.

🏦 How Banks Balance SLR and Non-SLR Portfolios

A well-run treasury desk does not view SLR and non-SLR investments as two disconnected buckets — it manages them as one continuous investment book with different constraints. The SLR portion is built first, sized precisely against NDTL to avoid both a shortfall (which invites penalties) and an unnecessary surplus (which is dead capital earning sub-optimal returns compared to credit deployment). Only after this statutory cushion is secured does the treasury allocate surplus funds into the non-SLR space, guided by board-approved investment policy limits on single-borrower and group exposure, rating floors for corporate paper, and tenor caps to control interest-rate sensitivity. Candidates studying the money market ecosystem should read the Money Market chapter, since short-term instruments frequently move between SLR-eligible T-Bills and non-SLR money market paper depending on how a bank structures its book. For a deeper dive into how banks price and auction government paper that ultimately becomes SLR-eligible, see our detailed piece on the G-Sec auction process. Treasury students who want to go further into the discretionary side should also study bond portfolio management, which explains how non-SLR corporate bond holdings are actively churned for return. Together, SLR and non-SLR investments determine both a bank's regulatory standing and its profitability from the treasury function, which is exactly why this pairing is a favourite examiner topic.

📌 Remember: SLR is about "how much you must hold," non-SLR is about "how much you choose to hold" — every MCQ on this topic ultimately tests which side of that line a given instrument falls on.

🧠 Practice MCQs: SLR and Non-SLR Investments

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Frequently Asked Questions on SLR and Non-SLR Investments

Conclusion: Lock In SLR and Non-SLR Investments Before Exam Day

For TIRM candidates, SLR and non-SLR investments are not two separate chapters to memorise in isolation — they are one continuous story about how a bank first secures regulatory compliance and only then chases return. Know the statutory percentage, the eligible instruments, the legal provision behind it, and the practical difference in purpose, and you will comfortably handle any variant of this question RBI-style examiners throw at you. Revisit the Treasury Investment and Risk Management tag hub for more topic-wise guides, brush up on related concepts like yield to maturity calculation and money market instruments, and put your understanding to the test with a full-length mock. Ready to check where you stand? Enrol in the CAIIB course for structured TIRM preparation or head straight to practice tests to attempt SLR and non-SLR investment questions under real exam conditions.