In order to offer certainty to banks, Reserve Bank of India (RBI) on Thursday prolonged the time interval for statutory liquidity ratio (SLR) holdings in held to maturity (HTM) class by one yr until March, 2022. Earlier in September, the central financial institution had elevated the boundaries of SLR holdings underneath HTM class to 22% from earlier 19.5% of the online demand and time liabilities (NDTL) until March, 2021.This dispensation is accessible to banks for securities acquired between September 1, 2020 and March 31, 2021.
Bankers really feel that transfer by RBI will present cushion when it comes to planning for them. “The opening of HTM window upto March 31, 2022 is a much needed move, otherwise we were worried about planning after March, 2021, ” a senior financial institution official instructed FE. “In the absence of this order, we were supposed to shift these securities from HTM category to available for sale (AFS) category from first quarter of next financial year.”
The funding portfolio of banks is assessed underneath held to maturity (HTM), obtainable on the market (AFS) and held for buying and selling (HFT) class. The holding of securities underneath HTM offers cushion for banks from valuation modifications.
The central financial institution mentioned that it desires to provide extra certainty to the markets concerning the standing of those investments in SLR securities after March 31, 2021. RBI additional mentioned that the HTM limits could be restored from 22% to 19.5% in a phased method ranging from the quarter ending June 30, 2022. It is predicted that banks will be capable of plan their investments in SLR securities optimally with a transparent glide path for restoration of HTM limits, RBI additional mentioned.
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