RBI raises small business customer threshold for LCR and NSFR to ₹7.5 crore

RBI/2021-22/151 DOR.No.PRD.LRG.79/21.04.098/2021-22 January 06, 2022 Dear Sir/Madam, Basel III Framework on Liquidity Standards – Liquidity Coverage Ratio (LCR), Liquidity Risk Monitoring Tools and LCR Disclosure Standards and Net Stable Funding ratio – Small Business Customers Please refer to the following instructions: Circular DBOD.BP.BC.No.120/21.04.098/2013-14 dated June 09, 2014 on ‘Basel III Framework on Liquidity Standards – Liquidity Coverage Ratio (LCR), Liquidity Risk Monitoring Tools and LCR Disclosure Standards’; Circular DBR.BP.BC.No.106/21.04.098/2017-18 dated May 17, 2018 on ‘Standards – Net Stable Funding Ratio (NSFR) – Final Guidelines’; Circular DBR.No.BP.BC.80/21.06.201/2014-15 dated March 31, 2015 on ‘Prudential Guidelines on Capital Adequacy and Liquidity Standards – Amendments’; and, Circular DOR.No.BP.BC.23/21.06.201/2020-21 dated October 12, 2020 on ‘Regulatory Retail Portfolio – Revised Limit for Risk Weight’. 2. With the objective to better align our guidelines with the BCBS standard and enable banks to manage liquidity risk more effectively, it has been decided to increase the threshold limit for deposits and other extensions of funds made by non-financial Small Business Customers from ₹ 5 crore to ₹ 7.5 crore for the purpose of maintenance of Liquidity Coverage Ratio (LCR). 3. The above modification is also applicable to deposits and other extensions of funds received from Small Business Customers referred to in the circular DBR.BP.BC.No.106/21.04.098/2017-18 dated May 17, 2018 on ‘Basel III Framework on Liquidity Standards – Net Stable Funding Ratio (NSFR) – Final Guidelines’. 4. The revised paragraphs after incorporating the above changes in the relevant circulars is given in Annex . Applicability 5. This circular is applicable to all Commercial Banks other than Regional Rural Banks, Local Area Banks and Payments Banks. 6. These instructions come into effect from the date of the circular. Yours faithfully (Usha Janakiraman) Chief General Manager ANNEX Sr. No.

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2021-22/151 · issued 06 Jan 2022. The plain-English explanation above is BankPulse’s own independent summary.

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Topics: Capital / Basel

Key dataSee the live numbers behind this topic: Bank Health Scores, NPA / Asset-Quality Tracker — updated from official RBI data.

Key termsPlain-English definitions of terms in this circular — see the full Indian banking glossary. CRAR (Capital adequacy) · Tier 1 & Tier 2 capital · Risk-Weighted Assets (RWA) · LCR (Liquidity Coverage Ratio)