RBI/2018-19/86
DBR.No.Ret.BC.10/12.02.001/2018-19
December
05, 2018
All Scheduled Commercial Banks
(including Regional Rural Banks)
Local Area Banks, Small Finance Banks, Payments Banks
Primary (Urban) Co-operative Banks (UCBs)
State and Central Co-operative Banks (StCBs / CCBs)
Dear Sir / Madam,
Section
24 and Section 56 of the Banking Regulation Act, 1949 -
Maintenance of Statutory Liquidity Ratio (SLR)
Please refer to our circular DBR.No.Ret.BC.90/12.02.001/2017-18 dated
October 04, 2017 on the captioned subject.
2. As announced in the Statement on Developmental and Regulatory Policies on
December 05, 2018, it has been decided to reduce the SLR requirement
of banks by 25 basis points every calendar quarter from 19.50 per cent of
their Net Demand and Time Liabilities (NDTL) to
(i) 19.25 per cent from January
5, 2019
(ii) 19.00 per cent from April
13, 2019
(iii) 18.75 per cent from July
6, 2019
(iv) 18.50 per cent from October
12, 2019
(v) 18.25 per cent from January
4, 2020
(vi) 18.00 per cent from April
11, 2020.
3. A copy of the relative
notification DBR.No.Ret.BC.11/12.02.001/2018-19 dated December 05, 2018,
is enclosed.
4. Please acknowledge receipt.
Yours faithfully,
(Dr.S.K.Kar)
Chief General Manager
DBR.Ret.BC
No.11/12.02.001/2018-19
December
05, 2018
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
supersession of the notifications DBR.No.Ret.BC.14/12.02.001/2016-17
dated October 13, 2016 and DBR.No.Ret.BC.91/12.02.001/2017-18
dated October 04, 2017, the Reserve Bank hereby specifies that:
(i) with effect from the dates
given below, every Scheduled Commercial Bank (including RRBs), Local Area
Bank, Small Finance Bank, Payments Bank, Primary (urban) co-operative bank
and State and central co-operative banks shall continue to maintain in
India assets (referred to as ‘SLR assets’) the value of which shall not, at
the close of business on any day, be less than:
(a) 19.25 per cent from January
5, 2019
(b) 19.00 per cent from April
13, 2019
(c) 18.75 per cent from July 6,
2019
(d) 18.50 per cent from October
12, 2019
(e) 18.25 per cent from January
4, 2020
(f) 18.00 per cent from April
11, 2020.
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; and
(ii) such SLR assets shall be
maintained by:
A. Scheduled Commercial Banks
(Including Regional Rural Banks), Local Area Banks, Small Finance Banks and
Payments Banks, as -
(a) cash; or
(b) gold as defined in Section
5(g) of the Banking Regulation Act, 1949 (10 of 1949) valued at a price not
exceeding the current market price: or
(c) unencumbered investment in
any of the following instruments [hereinafter referred to as Statutory
Liquidity Ratio securities (“SLR securities”)], namely:-
1.
Dated
securities of the Government of India issued from time to time under the
Market Borrowing Programme and the Market Stabilization Scheme ; or
2.
Treasury
Bills of the Government of India; or
3.
State
Development Loans (SDLs) of the State Governments issued from time to time
under the market borrowing programme:
(d) the deposit and unencumbered
approved securities required, under sub-section (2) of section 11 of the
Banking Regulation Act, 1949(10 of 1949), to be made with the Reserve Bank
by a banking company incorporated outside India;
(e) any balance maintained by a scheduled
bank with the Reserve Bank in excess of the balance required to be
maintained by it under section 42 of the Reserve Bank of India Act,1934 (2
of 1934);
The instruments referred to in
items at (c) (1) to (3) above that have been acquired from the Reserve Bank
under reverse repo, shall be included as SLR securities for the purpose of
maintenance of SLR assets.
Following securities shall not
be treated as encumbered for the purpose of maintenance of SLR assets,
namely:-
(a) securities lodged with another
institution for an advance or any other credit arrangement to the extent to
which such securities have not been drawn against or availed of;
(b) securities offered as
collateral to the Reserve Bank for availing liquidity assistance under
Marginal Standing Facility (MSF), up to the permissible percentage of the
total NDTL in India, carved out of the required SLR portfolio of the bank
concerned; and
(c) securities offered as
collateral to the Reserve Bank for availing liquidity assistance under
Facility to Avail Liquidity for Liquidity Coverage Ratio (FALLCR).
B. Primary (Urban) co-operative
banks/ State co-operative banks and Central co-operative banks as–
(a) Cash, or
(b) gold as defined in Section
5(g) of the Banking Regulation Act, 1949 (10 of 1949) read with section 56
thereof, valued at a price not exceeding the current market price: or
(c) Unencumbered investment in
approved securities as defined in section 5(a) of the Banking Regulation
Act, 1949 (10 of 1949) read with section 56 thereof:
The instruments that have been
acquired from the Reserve Bank under reverse repo, shall be included as SLR
securities for the purpose of maintenance of SLR assets.
Following securities shall not
be treated as encumbered for the purpose of maintenance of SLR assets,
namely:-
(a) securities lodged with
another institution for an advance or any other credit arrangement to the
extent to which such securities have not been drawn against or availed of;
and
(b) securities offered as
collateral to the Reserve Bank for availing liquidity assistance under
Marginal Standing Facility (MSF), up to the permissible percentage of the
total NDTL in India, carved out of the required SLR portfolio of the bank
concerned;
Explanation: The words and expressions used herein and defined
in the Annex to this notification, shall have the meanings respectively
assigned to them in the Annex.
2. The supersession of the
Notifications, DBR.No.Ret.BC.14/12.02.001/2016-17
dated October 13, 2016 and DBR.No.Ret.BC.91/12.02.001/2017-18
dated October 04, 2017 shall not in any manner affect the right
of the Reserve Bank to take such action as is open to it under the Banking
Regulation Act, 1949 (10 of 1949) for any contravention or default in
complying with any requirements of the said Notifications when they were in
force.
(Sudarshan Sen)
Executive Director
Annex
For the purpose of this
notification,
(a) “cash” to be maintained by:
i) Scheduled commercial
banks(including Regional Rural Bank), Small Finance Bank, Payments Bank and
Local Area Banks shall include,
·
cash
in hand,
·
the
net balance in current accounts with other scheduled commercial banks in
India.
·
the
deposit required under sub-section (2) of Section 11 of the Banking
Regulation Act, 1949 to be made with the Reserve Bank by a banking company
incorporated outside India;
ii) Primary (urban) co-operative
bank/State co-operative bank /Central Co-operative bank shall include:
·
cash
in hand maintained by a co-operative bank, which is a scheduled bank
·
Cash
in hand maintained by a co-operative bank, not being a scheduled bank, in
excess of the cash or balance required to be maintained under Section 18 of
the Banking Regulation Act, 1949 (10 of 1949) read with Section 56 thereof;
and
·
any
balances maintained by a Co-operative bank, which is a scheduled bank, with
the Reserve Bank in excess of the balance required to be maintained by it
under section 42 of the Reserve Bank of India Act, 1934 (2 of 1934);
·
any
balances maintained by a Co-operative bank, not being a scheduled bank,
with the Reserve Bank in excess of the balance required to be maintained by
it under Section 18 of the Banking Regulation Act, 1949 (10 of 1949) read
with Section 56 thereof; and
·
“Net
balances in current accounts” as defined in the Explanation to sub-section
(1) of Section 18 of the Banking Regulation Act, 1949 (10 of 1949) read
with Section 56 thereof, in excess of the balance required to be maintained
by it under the said section.
(b) “Commercial bank” shall mean
a banking company as defined in section 5(c) of the Banking Regulation Act,
1949 (10 of 1949) and includes the State Bank of India, a corresponding new
bank and a Regional Rural Bank.
(c) “Facility to Avail Liquidity
for Liquidity Coverage Ratio” shall mean facility whereby banks will be
permitted to reckon government securities held by them up to a certain per
cent of their NDTL within the mandatory SLR requirement as level 1 High
Quality Liquid Assets (HQLA) for the purpose of computing their Liquidity
Coverage Ratio (LCR).
(d) “Liquidity Adjustment
Facility” shall mean Repo auctions (for injection of liquidity) and reverse
repo auctions (for absorption of liquidity) conducted by the Reserve Bank.
(e) “Marginal Standing Facility”
shall mean the facility under which the eligible entities can avail
liquidity support from the Reserve Bank against SLR securities, up to a
certain per cent of their respective NDTL outstanding at the last Friday of
the second preceding fortnight.
(f) "Market Borrowing
Programme" shall mean the domestic rupee loans raised by the
Government of India and the State Governments from the public and managed
by the Reserve Bank through issue of marketable securities, governed by the
provisions of the Government Securities Act, 2006, Public Debt Act, 1944
and the Regulations framed under those Acts, through auction or any other
method, as specified in the notification issued in this regard.
(g) “Scheduled commercial bank”
shall mean a commercial bank included in the Second Schedule to the Reserve
Bank of India Act, 1934 (2 of 1934).
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