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Existing
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Level 1 assets will include the following and can
be included in the stock of liquid assets without any limit or haircut:
i. Cash including cash reserves in excess of
required CRR.
ii. Government securities in excess of the required
SLR.
iii. Within the SLR requirement, Government
securities to the extent allowed by RBI, under MSF.
Marketable securities issued or guaranteed by
foreign sovereigns satisfying all the following conditions:
(a) assigned a 0% risk weight under the Basel II
standardized approach for credit risk;
(b) Traded in large, deep and active repo or cash
markets, characterised by a low level of concentration; and proven record as
a reliable source of liquidity in the markets (repo or sale) even during
stressed market conditions.
(c) Not issued by a bank/financial institution/
NBFC or any of its affiliated entities.
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Amended
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Level 1 assets of banks would include the
following and can be included in the stock of liquid assets without any limit
or haircut:
i. Cash including cash reserves in excess of
required CRR.
For
banks incorporated in India,
Reserves held
with foreign Central Banks in excess of the reserve requirement, where the
country has been assigned a 0% risk weight as per rating by an international
rating agency.
Such reserves,
to the extent these balances cover the bank’s stressed net cash outflows in
that currency, where a country has not been assigned a 0% risk weight, but a
0% risk weight has been assigned at national discretion under Basel II
Framework.
ii. Government securities in excess of the required
SLR.
iii. Within the mandatory SLR requirement,
Government securities to the extent allowed by RBI, under MSF.
iv. Marketable securities issued or guaranteed by
foreign sovereigns satisfying
all the following conditions:
(a) assigned a 0% risk weight under the Basel II
standardized approach for credit risk;
(b) Traded in large, deep and active repo or cash
markets characterised by a low level of concentration; and proven record as a
reliable source of liquidity in the markets (repo or sale) even during
stressed market conditions.
(c) Not issued by a bank/financial
institution/NBFC or any of its affiliated entities.
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Based on RBI circular dated
2/08/17. For further clarification please refer www.rbi.org.in
..............Poppy
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