Reserve Bank of India Governor Duvvuri Subbarao comments on the statutory liquidity ratio, or the proportion of deposits lenders need to invest in government bonds. He was speaking in the western Indian city of Pune today.

“Indian banks are holding a high amount of government bonds because the fiscal deficit is high.

‘‘It also happens because the Reserve Bank of India has prescribed a statutory liquidity ratio requirement of 24 percent, considered by many people as high, on banks. Going forward, we need to reduce it but there are a number of preconditions which have to be met.’’

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