**Policy Summary: Deferral of Net Stable Funding Ratio (NSFR) Implementation**
This circular, RBI20202143 DOR.BP.BC.No.1621.04.098202021, issued by the Reserve Bank of India (RBI) on September 29, 2020, addresses all Commercial Banks excluding Regional Rural Banks, Local Area Banks, and Payments Banks, regarding the implementation of the Net Stable Funding Ratio (NSFR) guidelines under the Basel III framework on liquidity standards.
The circular refers to the previous guidelines issued on March 27, 2020, vide circular DOR.BP.BC.No.4621.04.098201920. Due to the continued uncertainty caused by COVID-19, the RBI has decided to defer the implementation of the NSFR guidelines by an additional six months. The NSFR guidelines will now come into effect from April 1, 2021.
For further information, Usha Janakiraman, Chief General Manager, can be contacted.
Key Entities Referenced
Reserve Bank of India (RBI): The central bank of India, responsible for regulating the banking sector.
Basel III Framework: An international regulatory framework for banks, designed to improve risk management and stability in the banking sector.
Liquidity Standards: A set of regulations designed to ensure that banks have enough liquid assets to meet their short-term obligations.
Net Stable Funding Ratio (NSFR): A regulatory metric that requires banks to maintain a minimum amount of stable funding relative to their assets.
COVID-19: The coronavirus disease 2019 pandemic, which caused global economic disruption.
Commercial Banks: Banks that accept deposits from the public and make loans to businesses and individuals.
Regional Rural Banks: Regional Rural Banks are financial institutions in India operating at a regional level to provide credit and banking services to the rural population.
Usha Janakiraman: Chief General Manager at Reserve Bank of India (RBI).
RBI/2020-21/43
DOR.BP.BC.No.16/21.04.098/2020-21
September 29, 2020
All Commercial Banks
(excluding Regional Rural Banks, Local Area Banks and Payments Banks)
Dear Sir/Madam,
Basel III Framework on Liquidity Standards –
Net Stable Funding Ratio (NSFR)
Please refer to our circular DOR.BP.BC.No.46/21.04.098/2019-20 dated March 27,
2020 on Net Stable Funding Ratio (NSFR) guidelines.
2. In view of the continued uncertainty on account of COVID-19, on a review, it has
been decided to defer the implementation of NSFR guidelines by a further period of
six months. These guidelines shall now come into effect from April 1, 2021.
Yours faithfully
(Usha Janakiraman)
Chief General Manager