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UCB Deposits with DCCB/SCBs: SLR Treatment Tightened

No longer current — withdrawn, no replacement on file yet

Source: Reserve Bank of India · RBI/2007-2008/142 · issued 20 Sep 2007 · ~2 min read

Quick answerRBI now mandates that any loan a UCB has taken from a DCCB/SCB must be deducted from its deposits with that lender when calculating SLR, even if no lien is marked. This prevents double-counting of encumbered deposits as liquid assets.

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.

Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.

What banks were required to do at the time

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)

❓ Common questions

Regulatory timeline

Decoded by BankPulse 2026-06-19 15:19 IST
repealed_by — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
Status change: withdrawn 05 Aug 2026, 04:00 IST

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

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.

📜 This document’s life story (1 recorded event, each backed by RBI’s own words)

Repealed by RBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)

RBI’s words: “Official withdrawal register entry #2338: UBD.CO.BPD.(PCB).No.17/12.05.001/2007-08 — "Treatment of Deposits with DCCB / SCBs as SLR" dated September 20, 2007”

📜 Read the original circular — full text as issued by RBI

RBI/2007-2008/142
 UBD.CO. BPD. (PCB). No. 17/12.05.001/2007-08
 September 20,  2007
 CEOs of all
 Primary (Urban) Co-operative Banks
 Dear Sir /Madam,
 Treatment of deposits with DCCB/SCBs as SLR 
 Please refer to the provisions of Section 24 of Banking Regulation Act, 1949 (AACS) in terms of which the deposits placed by UCBs with the higher financing agencies in the cooperative sector, viz. DCCBs / SCBs would be reckoned as SLR assets to the extent that they were not encumbered. However, instances have come to light where some UCBs were availing loans from the DCCB/SCB concerned without specifically earmarking their liability against their deposits and therefore technically the entire deposits were being treated as eligible SLR asset. The lender bank (DCCB/SCB) can exercise its lien over the deposits of UCBs which have availed loans, in case of defaults. As such, the deposits may not be available to the UCBs to meet their liquidity needs. It has, therefore, been decided that when a UCB has availed a loan from a DCCB/SCB with which it is maintaining deposits, the amount of loan availed from the DCCB/SCB, would be deducted from the deposits irrespective of whether lien has been marked on such deposits or not, for the purpose of computation of SLR.
 2.  UCBs are given a period of six months to comply with the SLR requirements in case of shortfall, if any, arising from the above instructions.
 3. Please acknowledge receipt to the Regional Office concerned.
 Yours faithfully,
 ( N.S.Vishwanathan )
 Chief General Manager-in-Charge

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2007-2008/142 · issued 20 Sep 2007. The plain-English explanation above is BankPulse’s own independent summary.

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BankPulse Compliance Evidence Pack — generated 05 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly).
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=3821&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.