What changed
Earlier, co-operative banks needed RBI's case-by-case approval for non-SLR investments. Now, banks meeting six conditions (NABARD NODC discipline, full credit needs met, no NABARD/CRR/SLR defaults, State Act provision, Registrar's no-objection, compliance with B.R. Act, and not under directions) can invest without prior RBI nod. The 10% deposit cap and 5% sub-ceiling for PSU bonds remain unchanged.
What it means for you
This gives compliant co-operative banks more operational flexibility to deploy surplus funds into non-SLR securities without waiting for RBI clearance. It reduces regulatory friction for well-run banks while maintaining safeguards. Banks must still ensure all legitimate credit needs are met first and keep their Regional Office informed.
What you must do
- Verify your bank meets all six conditions before making non-SLR investments without prior RBI approval.
- Ensure compliance with NABARD's NODC discipline and no defaults in CRR/SLR or NABARD dues.
- Obtain Registrar's no-objection and confirm State Act provision for the proposed investment.
- Place this circular before your bank's board for formal acknowledgment.
- Inform the concerned RBI Regional Office about any non-SLR investment made under this relaxed route.
Who it affects
State Co-operative Banks, District Central Co-operative Banks
What is the investment limit for non-SLR securities under this circular?
Total investment in PSU bonds and AFI bonds/equity cannot exceed 10% of the bank's total deposits as of March 31 of the previous year, with a sub-ceiling of 5% for PSU bonds.
Do we still need RBI approval if we don't meet all six conditions?
Yes, banks that do not comply with all six conditions must continue to obtain prior RBI approval on a case-to-case basis as before.
What should we do after making a non-SLR investment under this relaxed route?
You must keep the concerned RBI Regional Office informed about the investment, even though prior approval is not required.