**Policy Summary: SLR Holdings in HTM Category**
This circular, DoR.No.BP.BC.2221/04.141/2020-21, issued by the Reserve Bank of India on October 12, 2020, addresses Statutory Liquidity Ratio (SLR) holdings in the Held to Maturity (HTM) category for all commercial banks. It extends the dispensation provided in circular DoR.No.BP.BC.92/21.04.141/2020-21 dated September 1, 2020, regarding enhanced HTM limits for SLR securities.
Specifically, banks were permitted to exceed the standard 25% limit of total investments under the HTM category, provided the excess comprised solely of SLR securities, with total SLR securities held under HTM not exceeding 19.5% of Net Demand and Time Liabilities (NDTL) as of the last Friday of the second preceding fortnight. Furthermore, banks were allowed to hold SLR securities acquired on or after September 1, 2020, up to an overall limit of 22% of NDTL under the HTM category until March 31, 2021.
This policy extends the enhanced HTM limit of 22% for SLR securities acquired between September 1, 2020, and March 31, 2021, up to March 31, 2022, allowing banks to continue holding such excess SLR securities in the HTM category until that date.
The policy also mandates a phased restoration of the enhanced HTM limit to 19.5%, commencing with the quarter ending June 30, 2022. Banks must progressively reduce excess SLR securities acquired between September 1, 2020, and March 31, 2021, to ensure total SLR securities held in the HTM category as a percentage of NDTL do not exceed:
* 21.00% as of June 30, 2022
* 20.00% as of September 30, 2022
* 19.50% as of December 31, 2022
To facilitate compliance with the phased reduction, banks are permitted to shift excess SLR securities from the HTM category to Available for Sale (AFS)/Held for Trading (HFT) during the quarter in which the HTM ceiling is reduced. This is in addition to the annual shifting permitted at the beginning of the accounting year, subject to Board of Directors approval.
For further information, contact the Department of Regulation, Central Office, Reserve Bank of India, 12th-13th Floor, Central Office Building, Shahid Bhagat Singh Marg, Mumbai – 400001. Tel No: 22661602, 22601000. Fax No: 022-2270 5670, 2260 5671, 2270 5691, 2260 5692.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for regulating the banking sector.
Commercial Banks: Banks that accept deposits and make loans to businesses and individuals.
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 pertaining to the classification, valuation, and operation of investment portfolios of commercial banks.
SLR securities: Securities that banks are required to hold as part of their Statutory Liquidity Ratio (SLR) requirements.
HTM category: Held to Maturity category, a classification for investments that banks intend to hold until maturity.
Net Demand and Time Liabilities (NDTL): A measure of a bank's deposit base, used for calculating various regulatory ratios.
Mumbai, Maharashtra: The location of the Central Office of the Department of Regulation, 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 �रजवर् ब�क
___________RESERVE BANK OF INDIA___________
www.rbi.org.in
RBI/2020-2021/54
DoR.No.BP.BC.22/21.04.141/2020-21 October 12, 2020
All Commercial Banks
Madam/ Sir,
SLR holdings in HTM category
Please refer to paragraph 2 of Statement on Developmental and Regulatory Policies
of the Monetary Policy Statement, 2020-21 dated October 9, 2020 and our circular
DoR.No.BP.BC.9/21.04.141/2020-21 dated September 1, 2020 on the above subject.
2. Banks are permitted to exceed the limit of 25 per cent of the total investments under
Held to Maturity (HTM) category provided the excess comprises only of SLR securities
and total SLR securities held under HTM categoryn is not more than 19.5 per cent of
w
Net Demand and Time Liabilities (NDTL) as on the last Friday of the second preceding
a
fortnight. Banks are, vide our circular daterd September 1, 2020 referred to above,
d
h
allowed to hold under HTM category, SLR securities acquired on or after September 1,
t
i
W
2020 up to an overall limit of 22 per cent of NDTL, up to March 31, 2021. It has now
been decided to extend the dispensation of the enhanced HTM limit of 22 percent, for
SLR securities acquired between September 1, 2020 and March 31, 2021, up to
March 31, 2022, i.e. banks may continue to hold such excess SLR securities in HTM
category upto March 31, 2022.
3. It has also been decided that the enhanced HTM limit shall be restored to 19.5 per
cent in a phased manner, beginning from the quarter ending June 30, 2022, i.e. the
excess SLR securities acquired by banks during the period September 1, 2020 to
March 31, 2021 shall be progressively reduced such that the total SLR securities held
in the HTM category as a percentage of the NDTL does not exceed:
(a) 21.00 per cent as on June 30, 2022
(b) 20.00 per cent as on September 30, 2022
(c) 19.50 per cent as on December 31, 2022
___________________________________________________________________________-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------_______
िविनयमन िवभाग, क��ीय कायार्लय, 12व� और 13व� मंिज़ल, क��ीय कायार्लय भवन, शहीद भगत �संह मागर्, मुंबई 400001
टेलीफोन /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 Building, Shahid Bhagat Singh Marg, Mumbai - 400001
Tel No: 22661602, 22601000 Fax No: 022-2270 5670, 2260 5671, 5691, 56924. As per extant instructions, banks may shift investments to/from HTM with the
approval of the Board of Directors once a year and such shifting will normally be
allowed at the beginning of the accounting year. However, in order to enable banks to
shift their excess SLR securities from the HTM category to AFS/HFT to comply with
the instructions as indicated in paragraph 3 above, it has been decided to allow such
shifting of the excess securities during the quarter in which the HTM ceiling is brought
down. This would be in addition to the shifting permitted at the beginning of the
accounting year.
Yours faithfully
-sd-
(Usha Janakiraman)
Chief General Manager
n
w
a
r
d
h
t
i
W
- 2 -