What changed
The special dispensation HTM limit for SLR securities was increased from 22% to 23% of NDTL. Banks can now include securities acquired between April 1, 2022 and March 31, 2023 under this enhanced limit. The limit will be restored to 19.5% in a phased manner: 22% by June 30, 2023, 21% by September 30, 2023, 20% by December 31, 2023, and 19.5% by March 31, 2024.
What it means for you
Banks get additional headroom to hold SLR securities in HTM, reducing mark-to-market volatility on their books. However, the phased restoration from June 2023 requires careful planning to avoid forced selling. This supports bond demand in the near term but signals eventual normalization.
What you must do
- Review your HTM portfolio composition and ensure SLR securities acquired up to March 31, 2023 are within the new 23% limit.
- Plan for the phased reduction starting June 30, 2023, by identifying securities to shift out of HTM or sell.
- Update internal investment policy and risk management systems to reflect the revised HTM limits and restoration schedule.
- Communicate the changes to treasury and ALM teams for compliance and strategy alignment.
Who it affects
All commercial banks, Treasury departments, ALM and risk management teams, Investment portfolio managers
What is the new HTM limit for SLR securities?
The enhanced HTM limit is now 23% of NDTL, up from 22%, for SLR securities acquired between April 1, 2022 and March 31, 2023.