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SDF Balances Now Count as SLR Assets

Current · Source: Reserve Bank of India · RBI/2022-23/23 · issued 08 Apr 2022 · ~1 min read
Quick answerRBI now allows banks to count Standing Deposit Facility (SDF) balances as eligible SLR assets, treating them as 'cash' for SLR maintenance. This change, effective April 8, 2022, does not extend to CRR purposes.
The rule, in the simplest words
How it plays out — a real example

A treasury officer in Indore, Priya, is checking her bank's daily SLR position. She sees they have ₹10 crore parked in the SDF from yesterday. She tells her team, 'Good news – we can now use that SDF balance as cash for our SLR requirement, so we don't need to buy extra government bonds today. But remember, it doesn't help with our CRR, so we still need to keep separate cash for that.'

What changed

RBI has decided that balances held by banks under the newly instituted Standing Deposit Facility (SDF) will be considered an eligible SLR asset. These balances must be reported under 'Cash in hand' in Form VIII or Form I for SLR maintenance. However, SDF balances cannot be used for Cash Reserve Ratio (CRR) compliance.

What it means for you

Banks can now use SDF deposits to meet their SLR requirements, offering more flexibility in liquidity management. This reduces the need to hold additional government securities for SLR, potentially freeing up balance sheet capacity. However, since SDF balances don't count for CRR, banks must still maintain separate cash reserves for that purpose.

What you must do

Who it affects

All Scheduled Commercial Banks, Regional Rural Banks, Local Area Banks, Small Finance Banks, Payments Banks, Primary Urban Co-operative Banks, State and Central Co-operative Banks

❓ Common questions

Regulatory timeline

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

Can SDF balances be used for both SLR and CRR maintenance?

No, SDF balances are eligible only for SLR maintenance, not for CRR. They count as 'cash' for SLR but are excluded from CRR calculations.

How should banks report SDF balances for SLR?

Banks must report SDF balances under 'Cash in hand' in Form VIII or Form I, as applicable, for SLR maintenance.

When did this change take effect?

The change was announced on April 8, 2022, and took effect immediately from that date.

📜 Read the original circular — full text as issued by RBI
RBI/2022-23/23 DOR.RET.REC.15/12.01.001/2022-23 April 08, 2022 All Scheduled Commercial Banks (including Regional Rural Banks) Local Area Banks, Small Finance Banks, Payments Banks Primary (Urban) Co-operative Banks (UCBs) State and Central Co-operative Banks (StCBs / CCBs) Madam/Sir, Section 24 and Section 56 of the Banking Regulation Act, 1949 – Maintenance of Statutory Liquidity Ratio (SLR) Please refer to circular DBR.No.Ret.BC.10/12.02.001/2018-19 dated December 05, 2018 and relative notification on the captioned subject. 2. As announced in the Statement on Developmental and Regulatory Policies on April 08, 2022 , it has been decided to institute the Standing Deposit Facility (SDF) with immediate effect. Accordingly, it is decided that the balances held by banks with the RBI under the SDF shall be an eligible Statutory Liquidity Ratio (SLR) asset and such balances shall form part of “Cash” for SLR maintenance. Banks shall report the SDF balances under "Cash in hand" in Form VIII or Form I, as applicable. 3. The balances held by banks with RBI under the SDF shall not be eligible for Cash Reserve Ratio (CRR) maintenance. 4. A copy of the relative notification DOR.RET.REC.16/12.01.001/2022-23 dated April 08, 2022, is enclosed . Yours faithfully, (Prakash Baliarsingh) Chief General Manager DOR.RET.REC.16/12.01.001/2022-23 April 08, 2022 NOTIFICATION In exercise of the powers conferred by sub-section (2A) of Section 24 read with Section 51 and Section 56 of the Banking Regulation Act, 1949 (10 of 1949) and in partial modification to notification DBR.Ret.BC No.11/12.02.001/2018-19 dated December 05, 2018 , the Reserve Bank hereby specifies that for the purpose of this notification, “Cash” to be maintained by banks, as referred to in the Annex of the notification ibid, shall also include the balances held by banks with RBI under Standing Deposit Facility (SDF). (Jayant Kumar Dash) Executive Director
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2022-23/23 · issued 08 Apr 2022. The plain-English explanation above is BankPulse’s own independent summary.
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Who does what — compliance checklist
💻 IT / Systems
  • Update internal SLR reporting systems to include SDF balances under 'Cash in hand' in Form VIII or Form I.
📜 Compliance
  • Ensure treasury teams are aware that SDF balances are SLR-eligible but not CRR-eligible.
  • Review liquidity buffers to optimize use of SDF for SLR compliance without affecting CRR obligations.
  • Train reporting staff on the revised classification for SLR maintenance.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template

Example: if you are an IT/Systems lead at a bank this circular applies to (All Scheduled Commercial Banks, Regional Rural Banks, Local Area Banks, Small Finance Banks, Payments Banks, Primary Urban Co-operative Banks, State and Central Co-operative Banks), your first concrete step on “SDF Balances Now Count as SLR Assets” is: “Update internal SLR reporting systems to include SDF balances under 'Cash in hand' in Form VIII or Form I.” (RBI issued this 08 Apr 2022).

  1. Circular: RBI/2022-23/23 -- SDF Balances Now Count as SLR Assets
  2. Issued: 08 Apr 2022
  3. Action required: Update internal SLR reporting systems to include SDF balances under 'Cash in hand' in Form VIII or Form I.
  4. Action required: Ensure treasury teams are aware that SDF balances are SLR-eligible but not CRR-eligible.
  5. Action required: Review liquidity buffers to optimize use of SDF for SLR compliance without affecting CRR obligations.
  6. Action required: Train reporting staff on the revised classification for SLR maintenance.
  7. Owner: ____________ Target date: ____________
  8. Board/committee approval needed? Y / N
  9. Evidence filed in compliance register on: ____________
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Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12289&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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