On the same day , the government issues bonds of simi lar quantum, and those banks subscribe the instruments directly. These bonds are of two kinds: Lenders could either sell them in the secondary market or hold them until maturity . Such money too can help banks extend good-quality loans.These bonds are likely to have non-SLR status. Statutory Liquidity Ratio , or the portion of deposits that banks are mandated to keep in government bonds, is now at 19.5 per cent.No. Market participants say that the government had infused as much as `20,000 crore into state-owned banks between 1985 and 1995.

Source: Economic Times October 25, 2017 03:45 UTC