RBI/2017-18/70
DBR.No.Ret.BC.90/12.02.001/2017-18
October
4, 2017
All Commercial Banks,
Primary (Urban) Co-operative Banks (UCBs)
State and Central Co-operative Banks (StCBs/CCBs)
Madam/Dear Sir,
Section
24 and Section 56 of the Banking Regulation Act, 1949 –
Maintenance of SLR and holdings of SLR in HTM category
Please refer to our circulars
DBR.No.BP.BC.65/21.04.141/2015-16 dated December 10, 2015 and DBR.No.Ret.BC.71/12.01.001/2016-17 dated June 7, 2017 on
the captioned subject.
2. As announced in the Fourth
Bi-monthly Monetary Policy Statement, 2017-18 on October 04, 2017, it has
been decided to reduce the SLR requirement of banks from 20.0 per cent of
their Net Demand and Time Liabilities (NDTL) to 19.5 per cent from the
fortnight commencing October 14, 2017. A copy of the relative notification
DBR.No.Ret.BC.91/12.02.001/2017-18 dated October 4, 2017 is attached.
3. Currently, the banks are
permitted to exceed the limit of 25 per cent of the total investments under
HTM category, provided the excess comprises of SLR securities and total SLR
securities held under HTM category are not more than 20.5 per cent of NDTL.
In order to align this ceiling on the SLR holdings under HTM category with
the mandatory SLR, it has been decided to reduce the ceiling from 20.5 per
cent to 19.5 per cent in a phased manner, i.e. 20 per cent by December 31,
2017 and 19.5 per cent by March 31, 2018.
4. As per extant instructions,
banks may shift investments to/from HTM with the approval of the Board of
Directors once a year, and such shifting will normally be allowed at the
beginning of the accounting year. In order to enable banks to shift their
excess SLR securities from the HTM category to AFS/HFT to comply with
instructions as indicated in paragraph 3 above, it has been decided to
allow such shifting of the excess securities and direct sale from HTM
category. This would be in addition to the shifting permitted at the
beginning of the accounting year, i.e., in the month of April. Such
transfer to AFS/HFT category as well as sale of securities from HTM
category, to the extent required to reduce the SLR securities in HTM
category in accordance with the regulatory instructions, would be excluded
from the 5 per cent cap prescribed for value of sales and transfers of
securities to/from HTM category under paragraph 2.3 (ii) of the Master
Circular on Prudential Norms for Classification, Valuation and Operation of
Investment Portfolio by Banks.
Yours faithfully,
(S.S. Barik)
Chief General Manager-in-Charge
DBR.No.Ret.BC.91/12.02.001/2017-18
October
4, 2017
NOTIFICATION
In exercise of the powers
conferred by sub-section (2A) of Section 24 read with Section 51 and
Section 56 of the Banking Regulation Act, 1949 (10 of 1949) and in partial
modification of the Notification Ref.DBR.No.BC.73/12.02.001/2016-17
dated June 7, 2017, the Reserve Bank hereby specifies that:
With effect from October 14,
2017, every commercial bank, primary (urban) co-operative bank, state co-operative
bank and central co-operative bank shall maintain in India assets (referred
to as ‘SLR assets’ in the above Notification) the value of which shall not,
at the close of business on any day, be less than 19.5 per cent of their
total net demand and time liabilities in India as on the last Friday of the
second preceding fortnight, valued in accordance with the method of
valuation specified by the Reserve Bank from time to time.
All other instructions contained
in the Notification dated June 7, 2017, referred to above, shall continue
to apply.
(Sudarshan
Sen)
Executive Director
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