Executive Summary:
These guidelines regarding SLR holdings in the HTM category have been updated, extending the enhanced HTM limit of 22% of NDTL for SLR securities acquired between September 1, 2020, and March 31, 2022, until March 31, 2023. Banks must restore the HTM limit to 19.5% of NDTL in a phased manner, starting with the quarter ending June 30, 2023, and concluding by December 31, 2023. Banks are permitted to shift excess SLR securities from the HTM category during the quarter in which the HTM ceiling is reduced. The guidelines have been repealed and superseded by the Reserve Bank of India Classification, Valuation and Operation of Investment Portfolio of Commercial Banks Directions, 2021.
Key Points / Main Content:
* **Enhanced HTM Limit Extension:**
* The enhanced HTM limit of 22% of NDTL is extended to March 31, 2023.
* This extension applies to SLR securities acquired between September 1, 2020, and March 31, 2022.
* **Restoration of HTM Limit:**
* The HTM limit must be restored to 19.5% of NDTL in phases, starting June 30, 2023.
* Specific percentage limits for SLR securities under the HTM category are:
* 21.00% as of June 30, 2023
* 20.00% as of September 30, 2023
* 19.50% as of December 31, 2023
* **Shifting of Securities:**
* Banks can shift excess SLR securities from the HTM category to AFS or HFT during the quarter when the HTM ceiling is reduced.
* This is in addition to the annual shifting permitted at the beginning of the accounting year.
* **Original Limits:**
* 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
* Total SLR securities held under HTM category is not more than 19.5 per cent of Net Demand and Time Liabilities (NDTL) as on the last Friday of the second preceding fortnight.
Impact Analysis:
Commercial Banks:
* Impact: Banks are granted an extension to maintain a higher HTM limit for specific SLR securities, followed by a phased reduction. They are also provided with flexibility in shifting securities.
* Action Required: Banks need to adjust their investment portfolios according to the revised HTM limits and timelines. Banks must also shift their excess SLR securities from the HTM category to available for sale (AFS) or held for trading (HFT) to comply with the instructions by the specified deadlines.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for regulating the banking sector.
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.
Commercial Banks: Financial institutions that accept deposits and make loans to businesses and individuals.
SLR: Statutory Liquidity Ratio, the minimum percentage of deposits a commercial bank must maintain in liquid assets.
HTM: Held to Maturity category of investments, where banks intend to hold the securities until maturity.
NDTL: Net Demand and Time Liabilities, a measure of a bank's deposit base.
September 1, 2020: Start date of the period during which SLR securities acquired are eligible for enhanced HTM limit.
March 31, 2022: End date of the period during which SLR securities acquired are eligible for enhanced HTM limit and the original deadline for the special dispensation.
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/2020-21/94
DOR.No.MRG.BC.39/21.04.141/2020-21 February 5, 2021
All Commercial Banks
Madam/ Sir,
SLR holdings in HTM category
Please refer to paragraph 4 of Statement on Developmental and Regulatory Policies
dated February 5, 2021 and our circular DoR.No.BP.BC.22/21.04.141/2020-21 dated
October 12, 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:
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a) the excess comprises only of SLR securitiews; and
a
b) total SLR securities held under HTM crategory is not more than 19.5 per cent of
d
Net Demand and Time Liabilities h(NDTL) as on the last Friday of the second
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i
preceding fortnight. W
3. With respect to the limit stated in paragraph 2(b) above, banks have been granted
a special dispensation of enhanced HTM limit of 22 per cent of NDTL, for SLR
securities acquired between September 1, 2020 and March 31, 2021, until March 31,
2022. The enhanced limit was required to be restored in a phased manner over three
quarters beginning with the quarter ending June 30, 2022.
4. It has now been decided to extend the dispensation of enhanced HTM of 22 per
cent to March 31, 2023 to include SLR securities acquired between April 1, 2021 and
March 31, 2022. Thus, banks may exceed the limit specified in paragraph 2(b) above
upto 22 per cent of NDTL (instead of 19.5 per cent of NDTL) till March 31, 2023,
provided such excess is on account of SLR securities acquired between September
1, 2020 and March 31, 2022.
िविनयमन िवभाग, क�द्रीय काया�लय, 12वी ंऔर 13वी ंमंिज़ल, क�द्रीय काया�लय भवन, शहीद भगत िसंह माग�, मुंबई 400001
टेलीफोन /Tel No: 22661602, 22601000 फै�/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, 56925. The schedule for restoring the enhanced HTM limit to 19.5 per cent of NDTL
specified in paragraph 3 of the circular dated October 12, 2020 referred to above is
accordingly modified. The enhanced HTM limit shall be restored to 19.5 percent in a
phased manner, beginning from the quarter ending June 30, 2023, i.e. the excess SLR
securities acquired by banks during the period September 1, 2020 to March 31, 2022
shall be progressively reduced from the HTM category such that the total SLR
securities under the HTM category as a percentage of the NDTL does not exceed:
a) 21.00 per cent as on June 30, 2023
b) 20.00 per cent as on September 30, 2023
c) 19.50 per cent as on December 31, 2023
6. 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
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shift their excess SLR securities from the HTM wcategory to available for sale (AFS)/
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held for trading (HFT) to comply with the instructions as indicated in paragraph 5
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d
above, it has been decided to allow such shifting of the excess securities during the
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quarter in which the HTM ceiling isi brought down. This would be in addition to the
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shifting permitted at the beginning of the accounting year.
Yours faithfully,
(Usha Janakiraman)
Chief General Manager
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