What changed
The earlier circular allowed banks to maintain SLR up to 1.5% below the statutory requirement under the special term repo facility. With the discontinuation of that facility on October 27, 2009, this SLR relaxation stands withdrawn from the same date.
What it means for you
Banks must now fully comply with the statutory SLR requirement without the earlier 1.5% cushion. This tightens liquidity management, as the special repo window for funding to NBFCs, HFCs, and mutual funds is also closed.
What you must do
- Restore SLR holdings to the full statutory percentage of NDTL immediately.
- Review liquidity buffers and adjust investment portfolios to meet SLR compliance.
- Assess impact on funding to NBFCs, HFCs, and mutual funds given the repo facility closure.
Who it affects
All scheduled commercial banks (excluding RRBs), Treasury and ALM desks, Banks with exposure to NBFCs, HFCs, and mutual funds
What was the SLR relaxation that has been withdrawn?
Banks were allowed to maintain SLR up to 1.5% below the statutory requirement on their net demand and time liabilities, under the special term repo facility.
When did this withdrawal take effect?
The withdrawal is effective from October 27, 2009, the same date the special term repo facility was discontinued.
Does this affect all banks?
Yes, all scheduled commercial banks except Regional Rural Banks are affected by this change.