What changed
RBI reviewed representations from Salary Earners Co-operative Banks citing difficulties in implementing earlier instructions on SLR treatment of deposits with DCCBs/SCBs. The regulator granted a further extension of time until March 31, 2009, for these banks to comply with the requirement that loans availed from DCCB/SCB be deducted from deposits (regardless of lien marking) for SLR reckoning.
What it means for you
Salary Earners Urban Co-operative Banks get additional breathing room to adjust their SLR compliance processes without immediate penalty. For other UCBs, the original rule remains unchanged: any loan taken from a DCCB/SCB where deposits are held must reduce the deposit amount considered for SLR, even if no formal lien exists. Banks should use this extended period to align systems and avoid SLR shortfalls.
What you must do
- Ensure your bank's SLR computation correctly deducts any loan availed from DCCB/SCB from corresponding deposits, irrespective of lien marking.
- If you are a Salary Earners Co-operative Bank, update your compliance timeline to meet the new deadline of March 31, 2009.
- Review and adjust internal processes to automatically flag such loan-deposit relationships for SLR calculation.
- Acknowledge receipt of this circular to your respective Regional Office as instructed.
Who it affects
Salary Earners Primary (Urban) Co-operative Banks, All Urban Co-operative Banks maintaining deposits with DCCBs/SCBs, DCCBs and SCBs that extend loans to UCBs
Does this extension apply to all Urban Co-operative Banks or only Salary Earners banks?
The extension is specifically granted to Salary Earners Co-operative Banks. Other UCBs must continue to comply with the original instructions without any deadline relaxation.
What happens if a Salary Earners bank fails to comply by March 31, 2009?
The circular does not specify penalties, but non-compliance would mean such deposits cannot be counted as SLR, potentially leading to SLR shortfall and regulatory action.
Does the lien marking on deposits affect the SLR treatment?
No. The circular clearly states that the loan amount must be deducted from deposits for SLR purposes 'irrespective of whether lien has been marked on such deposits or not.'