What changed
The enhanced HTM limit of 22% of NDTL for SLR securities acquired between September 1, 2020 and March 31, 2021, originally valid until March 31, 2021, is now extended to March 31, 2022. After that, the limit will be restored to 19.5% in a phased manner: 21% by June 30, 2022, 20% by September 30, 2022, and 19.5% by December 31, 2022. Banks are allowed to shift excess SLR securities from HTM to AFS/HFT during the quarter the ceiling is reduced, in addition to the annual shift permitted at the start of the accounting year.
What it means for you
Banks get additional time to manage their HTM portfolios without forced sales, reducing mark-to-market volatility. The phased reduction gives banks a clear timeline to adjust holdings, but they must plan for gradual compliance. The extra shifting window during reduction quarters offers flexibility to align with market conditions.
What you must do
- Review your current SLR holdings in HTM category and ensure they do not exceed 22% of NDTL by March 31, 2022.
- Plan a phased reduction of excess SLR securities in HTM to meet the 21% limit by June 30, 2022, 20% by September 30, 2022, and 19.5% by December 31, 2022.
- Utilize the additional shifting window during each reduction quarter to move excess securities from HTM to AFS/HFT, beyond the annual shift.
- Update your investment policy and obtain Board approval for any shifts as required.
Who it affects
All commercial banks, Treasury and investment departments, Risk management teams
What is the new HTM limit for SLR securities?
The enhanced limit of 22% of NDTL for SLR securities acquired between September 1, 2020 and March 31, 2021 is extended until March 31, 2022. After that, it phases down to 19.5% by December 31, 2022.
Can we shift excess SLR securities from HTM to AFS/HFT during the reduction period?
Yes, RBI allows such shifting during the quarter in which the HTM ceiling is reduced, in addition to the annual shift permitted at the beginning of the accounting year.
What are the phased reduction milestones?
The HTM limit for SLR securities must not exceed 21% of NDTL as on June 30, 2022, 20% as on September 30, 2022, and 19.5% as on December 31, 2022.