LAF Securities No Longer Count as SLR Assets

RBI/2010-11/139 Ref. DBOD No. Ret. BC. 29/12.02.001/2010-11 July 27, 2010 All Scheduled Commercial Banks (Excluding Regional Rural Banks) Dear Sir, Section 24 of the Banking Regulation Act, 1949 Maintenance of Statutory Liquidity Ratio (SLR) Please refer to our circular DBOD.No.Ret.BC.41/12.02.001/2009-10 dated September 08, 2009 forwarding the Notification DBOD. No. Ret. BC. 40/12.02.001/2009-10 dated September 08, 2009, on the captioned subject. 2. It has been decided that the SLR securities (including margin) acquired under the Reserve Bank of India (RBI) - Liquidity Adjustment Facility (LAF), shall not be treated as an eligible asset for the maintenance of SLR under Section 24 of the BR Act, 1949. Accordingly, in partial modification of Notification DBOD. No. Ret. BC. 40/12.02.001/2009-10 dated September 08, 2009, we have issued the Notification Ref. DBOD. No. Ret. BC. 28/12.02.001/2010-11 dated July 27, 2010 ( enclosed ). 3. In terms of para 1.11 (a) of our Master Circular DBOD. No. Ret. BC. 23/12.01.001/2010-11 dated July 01, 2010 , the amount of any loan taken from the RBI is not included in the Liabilities for computation of Demand and Time Liabilities (DTL)/ Net Demand and Time Liabilities (NDTL) for the purpose of maintenance of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR). It is clarified that any funds borrowed from RBI under LAF window will continue not to form part of liabilities for the purpose of maintenance of CRR/SLR. 4. With a view to disseminating information on the SLR status of a Government security, it is advised that: (i) the SLR status of securities issued by the Government of India and the State Governments will be indicated in the Press Release issued by the Reserve Bank of India at the time of issuance of the securities; and (ii) an updated and current list of the SLR securities will be posted on the Reserve Bank's website ( http://www.rbi.org.in/ ) under the link "Database on Indian Economy". Yours faithfully, (B. Mahapatra) Chief General Manager-In-Charge Encls : as above Ref. DBOD. No. Ret. BC. 28/12.02.001/2010-11 July 27, 2010 NOTIFICATION In exercise of the powers conferred by sub-section (2A) of Section 24 of the Banking Regulation Act, 1949 (10 of 1949) and in partial modification of the Notification DBOD.No.Ret. BC.40/12.02.001/2009-10 dated September 08, 2009 , the Reserve Bank hereby specifies that the following proviso shall be inserted after clause (c) of the said Notification, namely, – “Provided that the securities (including margin) referred to above, if acquired under the Reserve Bank – Liquidity Adjustment Facility (LAF), shall not be treated as an eligible asset for this purpose.” (Anand Sinha) Executive Director

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2010-11/139 · issued 27 Jul 2010. The plain-English explanation above is BankPulse’s own independent summary.

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