What changed
The Statutory Liquidity Ratio (SLR) for scheduled commercial banks was increased to 25% of net demand and time liabilities (NDTL). This change takes effect from the fortnight beginning November 7, 2009, replacing the previous SLR requirement set in November 2008.
What it means for you
Banks must now hold a higher proportion of their deposits in approved government securities, reducing lendable resources. This move tightens liquidity and supports the government's borrowing program, potentially compressing net interest margins for lenders.
What you must do
- Recalibrate your investment portfolio to ensure SLR assets reach 25% of NDTL by November 7, 2009.
- Review liquidity projections and adjust short-term funding strategies to accommodate the higher SLR requirement.
- Communicate the revised SLR compliance timeline to your treasury and risk management teams.
- Monitor fortnightly NDTL calculations to avoid any shortfall in SLR maintenance.
Who it affects
All scheduled commercial banks (excluding Regional Rural Banks), Treasury departments, Risk management teams, Compliance officers
When does the new SLR of 25% become effective?
It applies from the fortnight starting November 7, 2009, as per the notification dated October 28, 2009.
Which banks are covered by this circular?
All scheduled commercial banks are covered, except Regional Rural Banks (RRBs).
What is the basis for calculating the 25% SLR?
The SLR is calculated as 25% of net demand and time liabilities (NDTL) in India as on the last Friday of the second preceding fortnight.