What changed
The SLR requirement for Local Area Banks was lowered from 25% to 23% of their Net Demand and Time Liabilities (NDTL). The change took effect from the fortnight beginning August 11, 2012, as per a notification dated September 28, 2012.
What it means for you
Local Area Banks now need to hold fewer government-approved securities, releasing liquidity for credit expansion or other investments. This can improve their lending capacity and profitability, but they must still meet the statutory minimum.
What you must do
- Update your SLR compliance calculations to reflect the new 23% threshold from August 11, 2012.
- Review your asset-liability management to deploy the freed liquidity optimally.
- Ensure all reporting systems reflect the revised SLR percentage for regulatory submissions.
Who it affects
All Local Area Banks in India
When did the SLR reduction become effective?
The new SLR of 23% applies from the fortnight beginning August 11, 2012.
What was the previous SLR for Local Area Banks?
The earlier SLR was 25% of NDTL, as per the November 2009 circular.
Does this change affect other bank categories?
No, this circular is specifically for Local Area Banks only.