What changed
RBI increased the required proportion of SLR in government/approved securities for non-scheduled UCBs. Tier-I banks must reach 7.5% of NDTL by Sep 2009 and 15% by Mar 2010. Tier-II banks continue at 15% until Mar 2010. All non-scheduled UCBs must hit 25% by Mar 2011.
What it means for you
Non-scheduled UCBs need to shift more funds into safer government securities, reducing lending capacity in the short term. This enhances liquidity and credit quality but may pressure margins. Banks must plan phased investments to meet deadlines without disrupting operations.
What you must do
- Calculate current SLR in government securities as % of NDTL for your bank.
- For Tier-I UCBs, ensure 7.5% by Sep 2009 and 15% by Mar 2010.
- For all non-scheduled UCBs, target 25% by Mar 2011.
- Adjust investment portfolio to meet phased targets without breaching other prudential norms.
- Acknowledge receipt of this circular to your regional RBI office.
Who it affects
Non-scheduled Urban Cooperative Banks (UCBs), Tier-I non-scheduled UCBs, Tier-II non-scheduled UCBs
What is the final SLR requirement in government securities for non-scheduled UCBs?
By March 31, 2011, all non-scheduled UCBs must maintain SLR in government and other approved securities at 25% of their NDTL.
Are scheduled UCBs covered by this circular?
No, this circular applies only to non-scheduled urban cooperative banks. Scheduled UCBs are not mentioned in the source.
What happens if a Tier-I UCB misses the September 2009 target?
The circular does not specify penalties, but banks should aim to meet the phased targets to avoid regulatory action. Contact your regional RBI office for guidance.