RBI details liquidity norms for banks
09 May 2011
Every scheduled commercial bank in India should continue to maintain assets, the value of which shall not, at the close of business on any day, be less than 24 per cent of its total net demand and time liabilities in India as on the last Friday of the second preceding fortnight, RBI said in new notification issued today.
Cash or gold valued at a price not exceeding the current market price, or investment in dated securities, treasury bills market stabilisation bonds, state development loans, or any such instrument notified by the RBI will qualify for being considered as `Statutory Liquidity Ratio (SLR) securities, RBI said.
Such securities (including margin), if acquired under the Reserve Bank- Liquidity Adjustment Facility (LAF), will not be treated as an eligible asset for this purpose.
Encumbered SLR securities will also not be included for the purpose of computing the percentage specified above.
However, for computing the percentage of SLR assets, 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 securities offered as collateral to the RBI for availing liquidity assistance from Marginal Standing Facility (MSF) up to one per cent of the total net demand and time liabilities of the required SLR portfolio of the bank concerned will be allowed.
Any balances maintained by a scheduled bank with the RBI in excess of the balance required to be maintained and net balances in current accounts with other scheduled commercial banks in India will also be eligible for SLR purpose.
The RBI, in its monetary policy review, has the overnight borrowing limit of scheduled commercial banks in the country at one per cent of their respective net demand and time liabilities (NDTL) under the Marginal Standing Facility (MSF) Scheme effective from the fortnight beginning on 7 May 2011.
RBI's repo rate, which increased last week by 50 basis points, stands at 7.25 per cent. As such, the rate charged under the MSF would be 8.25 per cent. The call money rate was hovering around 6.75 per cent today.
