**Policy Summary: Extension and Phased Reduction of Enhanced Held to Maturity (HTM) Limit for Statutory Liquidity Ratio (SLR) Securities**
This circular, issued by the Reserve Bank of India (RBI) on December 8, 2022, addresses the Held to Maturity (HTM) limit for Statutory Liquidity Ratio (SLR) eligible securities held by commercial banks. It references the Reserve Bank of India Classification, Valuation and Operation of Investment Portfolio of Commercial Banks Directions, 2021, dated August 25, 2021, and paragraph 1 of the Statement on Development and Regulatory Policies of the Monetary Policy Statement, 2022-23 dated December 7, 2022.
The key provision of this circular is the further extension of the enhanced HTM limit of 23% of Net Demand and Time Liabilities (NDTL) until March 31, 2024. This applies to SLR eligible securities acquired between September 1, 2020, and March 31, 2024.
The circular also outlines a phased reduction of the enhanced HTM limit, restoring it to 19.5% in the following manner:
* 22.00% as on June 30, 2024
* 21.00% as on September 30, 2024
* 20.00% as on December 31, 2024
* 19.50% as on March 31, 2025
This phased reduction requires banks to progressively reduce excess SLR securities acquired between September 1, 2020, and March 31, 2024, to meet these targets. All other existing instructions remain unchanged. The Master Direction will be amended accordingly.
This circular is applicable to all Commercial Banks and takes immediate effect. For further information, contact the Department of Regulation, Central Office, 12th/13th Floor, Central Office Bhavan, Shahid Bhagat Singh Marg, Mumbai – 400001, Tel No: 22661602, 22601000, Fax No: 022-2270 5670, 2260 5671, 2260 5691, 2260 5692.
Key Entities Referenced
Reserve Bank of India: The central bank of India.
Reserve Bank of India Classification, Valuation and Operation of Investment Portfolio of Commercial Banks Directions, 2021: A set of guidelines issued by the Reserve Bank of India regarding the classification, valuation, and operation of investment portfolios of commercial banks.
Monetary Policy Statement, 202223: A statement on development and regulatory policies related to monetary policy.
Net Demand and Time Liabilities (NDTL): A measure of a bank's liabilities.
Statutory Liquidity Ratio (SLR): The minimum percentage of deposits that a commercial bank has to maintain in the form of liquid assets.
Held to Maturity (HTM): A category of investments that banks intend to hold until maturity.
Mumbai, Maharashtra: Location of Department of Regulation, Central Office, Reserve Bank of India.
Usha Janakiraman: Chief General Manager at Reserve Bank of India.
The guidelines have been repealed. Please refer to the Reserve Bank of India (Classification, Valuation and Operation of Investment Portfolio of
Commercial Banks) Directions, 2021.
भारतीय �रज़व� ब�क
_________________________RESERVE BANK OF INDIA ______________________
www.rbi.org.in
RBI/2022-23/150
DOR.MRG.REC.89/21.04.141/2022-23 December 8, 2022
Review of SLR holdings in HTM category
Please refer to paragraph 1 of Statement on Development and Regulatory Policies of
the Monetary Policy Statement, 2022-23 dated December 7, 2022 and Section 6(iv)(a)
of Master Direction - Classification, Valuation and Operation of Investment Portfolio of
Commercial Banks (Directions), 2021 dated August 25, 2021.
2. At present, banks have been granted a special dispensation of enhanced Held to
Maturity (HTM) limit of 23 per cent of Net Demand and Time Liabilities (NDTL), for
Statutory Liquidity Ratio (SLR) eligible securities acquired between September 1, 2020
n
and March 31, 2023, until March 31, 2023.
w
a
3. On a review, it has been decided to further extend the dispensation of enhanced
r
d
HTM limit of 23 per cent of NDTL uptoh March 31, 2024 and allow banks to include
t
securities acquired between Septeimber 1, 2020 and March 31, 2024 under the
W
enhanced limit of 23 per cent.
4.The enhanced HTM limit of 23 per cent shall be restored to 19.5 percent in a phased
manner, beginning from the quarter ending June 30, 2024, i.e., the excess SLR
securities acquired by banks during the period September 1, 2020 to March 31, 2024
shall be progressively reduced such that the total SLR securities held in the HTM
category as a percentage of the NDTL do not exceed:
a) 22.00 per cent as on June 30, 2024
b) 21.00 per cent as on September 30, 2024
c) 20.00 per cent as on December 31, 2024
d) 19.50 per cent as on March 31, 2025
All other instructions shall remain unchanged.
5. The relevant sections of the Master Direction are being amended to reflect the
aforementioned changes.
_____________________________________________________________________________-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------_______
�व�नयमन �वभाग, क�द्र�य कायार्लय, 12वी ं और 13वी ं मंिज़ल, क�द्र�य कायार्लय भवन, शह�द भगत �सहं माग,र् मंबु ई 400001
टेल�फोन /Tel No: 22661602, 22601000 फैक्स/Fax No: 022-2270 5670, 2260 5671, 5691 2270, 2260 5692
Department of Regulation, Central Office, 12th & 13th Floor, Central Office Bhavan, Shahid Bhagat Singh Marg, Mumbai - 400001
Tel No: 22661602, 22601000 Fax No: 022-2270 5670, 2260 5671, 5691, 5692Applicability
6. This circular is applicable to all Commercial Banks.
7. These instructions shall come into force with immediate effect.
Yours faithfully,
(Usha Janakiraman)
Chief General Manager
n
w
a
r
d
h
t
i
W