What changed
Previously, UCBs could treat all deposits with DCCB/SCBs as SLR assets unless a specific lien was marked against a loan. Now, if a UCB has any outstanding loan from a DCCB/SCB, the loan amount is automatically deducted from the deposit balance for SLR computation, regardless of lien status.
What it means for you
UCBs can no longer inflate their SLR by counting deposits that are effectively collateral for loans. This reduces the liquidity buffer they can claim, potentially causing SLR shortfalls. Lenders must adjust their asset-liability management and may need to raise additional eligible securities.
What you must do
- Review all deposit accounts with DCCB/SCBs and identify any outstanding loans from those institutions.
- Recalculate SLR by deducting the loan amount from the corresponding deposit balance for each DCCB/SCB relationship.
- If a shortfall arises, use the six-month compliance window to arrange additional SLR-eligible assets.
- Update internal systems to automatically flag and deduct loan amounts from deposits for SLR reporting.
Who it affects
Primary (Urban) Co-operative Banks (UCBs), District Central Co-operative Banks (DCCBs), State Co-operative Banks (SCBs)
Does this apply if the loan is fully secured by other collateral?
Yes, the deduction is mandatory regardless of whether the loan is secured by other assets or whether a lien is marked on the deposits. The rule is based on the existence of a loan from the same DCCB/SCB.
What if the loan amount exceeds the deposit balance?
The deduction is limited to the deposit balance; you cannot have negative SLR. However, the entire deposit becomes ineligible for SLR if the loan is equal to or greater than the deposit.
Is there any grace period to comply?
Yes, UCBs have six months from the circular date to adjust any SLR shortfall arising from this change.