What changed
RBI consolidated and updated the CRR and SLR framework for Local Area Banks into a single set of Directions, 2025, replacing earlier circulars. The directions clarify definitions, apportionment of savings bank deposits into demand and time liabilities, and specify that only unencumbered approved securities qualify for SLR. Reporting requirements under statutory returns Form A (CRR) and Form VIII (SLR) are reaffirmed.
What it means for you
For LABs, this is a regulatory consolidation that brings clarity on compliance procedures, especially around savings deposit classification and SLR asset eligibility. Banks must ensure their systems correctly apportion savings deposits and track encumbrance of SLR securities. Non-compliance could attract penalties under the Banking Regulation Act and RBI Act.
What you must do
- Update internal policies to align with the new consolidated Directions for CRR and SLR maintenance.
- Ensure savings bank deposit apportionment into demand and time liabilities follows the prescribed half-yearly calculation method.
- Review SLR securities portfolio to confirm only unencumbered approved securities are counted for SLR compliance.
- Verify that CRR and SLR reporting is done using the correct statutory forms (Form A and Form VIII) within prescribed timelines.
Who it affects
Local Area Banks (LABs), Compliance and treasury departments of LABs
What is the effective date of these Directions?
The Directions came into force with immediate effect from November 28, 2025, as per the notification.
Do these Directions change the CRR or SLR rates for LABs?
No, the Directions do not prescribe any new rates; they consolidate and clarify the existing framework for maintenance and reporting.
How should LABs apportion savings bank deposits for CRR/SLR?
Banks must calculate the proportion of time and demand liabilities from savings deposits as at March 31 and September 30 each year, using the average of minimum balances for time liability, and apply that proportion for the next half-year's reporting fortnights.