**Policy Summary:**
This circular, DBR.BP.BC.No.3421/04.098/2018-19 dated April 4, 2019, issued by the Reserve Bank of India (RBI), addresses the Basel III Framework on Liquidity Standards, specifically the Liquidity Coverage Ratio (LCR), Liquidity Risk Monitoring Tools, and LCR Disclosure Standards. It follows up on circular DBR.BP.BC.No.42/1.04.098/2018-19 dated September 27, 2018, and para I.1 of the First Bi-Monthly Monetary Policy 2019-20 dated April 4, 2019.
The circular modifies the assets that can be considered Level 1 High Quality Liquid Assets (HQLAs) for LCR computation. It permits banks to include an additional portion of Government securities held under the Facility to Avail Liquidity for Liquidity Coverage Ratio (FALLCR) within the mandatory Statutory Liquidity Ratio (SLR) requirement as Level 1 HQLA.
This allowance is being implemented in a phased manner:
* Effective April 4, 2019: FALLCR is 13.50% of Net Demand and Time Liabilities (NDTL), Total HQLA carve-out from SLR is 15.50% of NDTL.
* Effective August 1, 2019: FALLCR is 14.00% of NDTL, Total HQLA carve-out from SLR is 16.00% of NDTL.
* Effective December 1, 2019: FALLCR is 14.50% of NDTL, Total HQLA carve-out from SLR is 16.50% of NDTL.
* Effective April 1, 2020: FALLCR is 15.00% of NDTL, Total HQLA carve-out from SLR is 17.00% of NDTL.
Banks must value these government securities reckoned as HQLA at an amount not greater than their current market value, regardless of whether they are held under Held-To-Maturity (HTM), Available-For-Sale (AFS), or Held-For-Trading (HFT) categories.
For further information, contact Saurav Sinha, Chief General Manager-in-Charge, Department of Banking Regulation, Central Office, 12th Floor, Shahid Bhagat Singh Marg, Mumbai – 400001. Tel No: 22661602, Fax No: 22705691, Email ID: cgmicdbr@rbi.org.in. Website: www.rbi.org.in
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for regulating the banking sector.
Scheduled Commercial Banks: Banks in India that are listed in the Second Schedule to the Reserve Bank of India Act, 1934.
RRBs: Regional Rural Banks, a type of scheduled commercial bank in India.
Small Finance Banks: A type of bank in India that focuses on providing financial services to underserved populations.
Basel III Framework: A set of international banking regulations designed to improve risk management and stability in the banking sector.
Liquidity Coverage Ratio (LCR): A key component of the Basel III framework, requiring banks to hold sufficient high-quality liquid assets to cover their net cash outflows over a 30-day stress period.
Marginal Standing Facility (MSF): A facility provided by the Reserve Bank of India to scheduled commercial banks to borrow money overnight against government securities.
Mumbai, Maharashtra: City in India where the central office of Department of Banking Regulation, Reserve Bank of India is located.
भारतीय �रजवर् ब�क
__________________RESERVE BANK OF INDIA _________________
www.rbi.org.in
RBI/2018-19/164
DBR.BP.BC.No.34/21.04.098/2018-19 April 4, 2019
All Scheduled Commercial Banks
(Excluding RRBs) & Small Finance Banks
Dear Sir/Madam,
Basel III Framework
on Liquidity Standards - Liquidity Coverage Ratio (LCR),
Liquidity Risk Monitoring Tools and LCR Disclosure Standards
Please refer to our circular DBR.BP.BC.No.4/21.04.098/2018-19 dated September
27, 2018, other associated circulars on the captioned subject and para I (1) of the
First Bi-Monthly Monetary Policy 2019-20 dated April 4, 2019.
2. Presently, the assets allowed as Level 1 High Quality Liquid Assets (HQLAs)
for the purpose of computing the LCR of banks, inter alia, include (a) Government
securities in excess of the minimum SLR requirement and, (b) within the mandatory
SLR requirement, Government securities to the extent allowed by RBI under (i)
Marginal Standing Facility (MSF) [presently 2 per cent of the bank's NDTL] and (ii)
Facility to Avail Liquidity for Liquidity Coverage Ratio (FALLCR) [presently 13 per
cent of the bank's NDTL].
3. It has been decided to permit banks to reckon an additional 2.0 percent
Government securities held by them under FALLCR within the mandatory SLR
requirement as Level 1 HQLA for the purpose of computing LCR, in a phased
manner, as under:
Effective Date FALLCR Total HQLA carve out from SLR
(per cent of NDTL) (per cent of NDTL)
April 4, 2019 13.50 15.50
August 1, 2019 14.00 16.00
December 1, 2019 14.50 16.50
April 1, 2020 15.00 17.00
4. For the purpose of LCR, banks shall continue to value such government
securities reckoned as HQLA at an amount not greater than their current market
value (irrespective of the category under which the security is held, i.e., HTM, AFS or
HFT).
Yours faithfully,
(Saurav Sinha)
[[
Chief General Manager-in-Charge
ब��कंग िविनयमन िवभाग, केन्�ीय कायार्लय, 12व� मंिज़ल, शहीद भगत �संह मागर्, मुंबई – 400001
Department of Banking Regulation, Central Office, 12th Floor, Shahid Bhagat Singh Marg, Mumbai - 400001
Tel No: 22661602 Fax No: 22705691 Email ID: cgmicdbr@rbi.org.in
�हदं ी आसान ह,� इसका �योग बड़ाइए