Statutory liquidity ratio of 25 per cent for banks mandatory: RBI

The Reserve Bank of India (RBI) has specified that every scheduled commercial bank should continue to maintain an amount not less than 25 per cent of its total net demand and time liabilities as statutory liquidity ratio.

RBI said the value of such assets should not in any case fall below 25 per cent of the total net demand and time liabilities as of the last Friday of the second preceding fortnight, valued in accordance with the valuation method specified by the RBI from time to time.

The SLR assets should comprise of cash, gold valued at a price not exceeding the current market price, unencumbered investment in instruments like dated securities to be issued by the Government of India under the market borrowing programme and under the market stabilisation scheme with SLR status, treasury bills, state development loans to be issued by state governments under their market borrowing programme, with SLR status incorporated in the relevant notification; and any other instrument notified in future by RBI for SLR status.

'Unencumbered investment' of a banking company should include its investment in the aforesaid 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," RBI said in a release.

In computing the amount for SLR purpose, the following shall be deemed to be cash maintained in India:

(i) 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) Any balances 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); and

(iii) Net balances in current accounts with other scheduled commercial banks in India.