What changed
RBI finalised the Basel III LCR framework after incorporating BCBS revisions from January 2013 and January 2014. The LCR will be phased in from 60% on January 1, 2015 to 100% by January 1, 2019. The circular also includes liquidity risk monitoring tools and LCR disclosure standards.
What it means for you
Banks must now hold high-quality liquid assets to cover net cash outflows over a 30-day stress period, starting at 60% in 2015. This phased approach gives lenders time to adjust their liquidity buffers. Compliance will require tighter asset-liability management and enhanced reporting.
What you must do
- Prepare for LCR implementation from January 1, 2015 with a minimum ratio of 60%.
- Align liquidity risk management frameworks with the final guidelines and monitoring tools.
- Ensure systems are ready for LCR disclosure standards as per BCBS requirements.
- Review asset-liability positions to meet the phased 100% LCR target by January 1, 2019.
Who it affects
All scheduled commercial banks (excluding RRBs), Treasury and asset-liability management teams, Risk management and compliance departments
What is the LCR phase-in schedule?
The LCR minimum requirement starts at 60% from January 1, 2015 and increases to 100% by January 1, 2019.
Which banks are covered by this circular?
All scheduled commercial banks except Regional Rural Banks (RRBs) are required to comply.
What documents form the basis of these guidelines?
The guidelines are based on BCBS documents from September 2008 and December 2010, revised in January 2013 and January 2014.