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SLR holdings in HTM category

Reserve Bank of India (RBI) has enhanced the Held to Maturity (HTM) limit for Statutory Liquidity Ratio (SLR) eligible securities.

What is Statutory Liquidity Ratio (SLR)?

Banks shall maintain in India assets (SLR assets) the value of which shall not, at the close of business on any day, be less than 18% (not exceeding 40%) of their total net demand and time liabilities in India as on the last Friday of the second preceding fortnight.

How is SLR to be maintained by banks?

The SLR can be maintained by banks in the following forms –

  1. Cash
  2. Gold
  3. Unencumbered investment in any of the following approved securities / SLR securities –

    • Dated securities of the Government of India 
    • Treasury Bills of the Government of India
    • Cash Management Bill (CMB) 
    • State Development Loans (SDLs) of the State Governments 
    • Any other instrument as may be notified by RBI (as and when prescribed)

What are investment categories?

Banks shall classify their entire investment portfolio (including SLR securities and non-SLR securities) under three categories –

  1. Held to Maturity (HTM) – means the category of investment portfolio maintained by the banks with intention to hold securities up to maturity.
  2. Available for Sale (AFS) – means the category of investment portfolio of banks, which do not fall within the HTM or HFT category.
  3. Held for Trading (HFT) – means the category of investment portfolio maintained by the banks with intention to trade in securities by taking advantage of the short-term price / interest rate movements.

What is the HTM limit for SLR eligible securities?

Total SLR securities held in the HTM category shall not be more than 19.5% of Net Demand and Time Liabilities (NDTL) as on the last Friday of the second preceding fortnight.

What relaxations have been granted in the prescribed limits?

Banks have been granted a special dispensation of enhanced HTM limit of 22% of NDTL, for SLR eligible securities acquired between September 01, 2020 and March 31, 2022, until March 31, 2023.

On a review in April 2022 –

  • The existing HTM limit of 22% of NDTL has been further enhanced to 23% of NDTL.
  • Banks have also been allowed to include securities acquired between April 01, 2022 and March 31, 2023 under the enhanced limit of 23%.

On a review in December 2022 –

  • Banks have been allowed to include securities acquired between September 01, 2020 and March 31, 2024 under the enhanced limit of 23%.

When shall the enhanced limit be restored?

The enhanced HTM limit of 23% shall be restored to 19.5% 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 01, 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 –

  • 22% as on June 30, 2024
  • 21% as on September 30, 2024
  • 20% as on December 31, 2024
  • 19.5% as on March 31, 2025


(updated on December 20, 2022)


References

Reserve Bank of India. (2021, August 25). 'Master Direction - Classification, Valuation and Operation of Investment Portfolio of Commercial Banks (Directions), 2021 (Updated as on April 8, 2022)'. Retrieved from https://m.rbi.org.in/SCRIPTs/BS_ViewMasDirections.aspx?id=12153

Reserve Bank of India. (2021, July 20). 'Master Direction - Reserve Bank of India [Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR)] Directions - 2021 (Updated as on April 06, 2022)'. Retrieved from https://www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=12131

Reserve Bank of India. (2022, April 08). 'Review of SLR holdings in HTM category'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12287&Mode=0#:~:text=3.,4.


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