Saturday, October 7, 2017

Maintenance of SLR and holdings of SLR in HTM category



RBI has reduced the rate of SLR from 20 % to 19.5 % of Net Demand and Term Liabilities from 14/10/2017.
Currently, Banks are permitted to exceed the limit of 25 % of the total investments under HTM category, provided
·        the excess comprises of SLR securities and
·    total SLR securities held under HTM category are not more than 20.5 % of NDTL.
In order to align this ceiling with the mandatory SLR, RBI has decided to reduce the ceiling from 20.5 % to 20 % by 31/12/17 and to 19.5 % by 31/03/18.
Normally, Banks are allowed to shift investments to/from HTM category once a year at the beginning of the accounting year with the approval of the Board of Directors.
In addition to this, RBI has now allowed Banks to shift their excess SLR securities from the HTM category to AFS/HFT, and has also allowed direct sale from HTM category in order to comply with the current SLR requirement.
Such transfer or sale would be excluded from the 5 % cap prescribed for value of sales and transfers of securities to/from HTM category as per extant RBI guidelines.
Based on RBI notification dated 4/10/18. For any further clarification, please refer www.rbi.org.in