Category: RBI News

RBI/2020-21/95
DOR.No.LRG.BC.40/21.04.098/2020-21

February 05, 2021

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 DBR.BP.BC.No.106/21.04.098/2017-18 dated May 17, 2018 on Basel III Framework on Liquidity Standards – Net Stable Funding Ratio (NSFR)-Final Guidelines (‘NSFR Guidelines’) and circular DOR.BP.BC.No.16/21.04.098/2020-21 dated September 29, 2020 deferring the implementation of the said guidelines till April 1, 2021.

2. In view of the ongoing stress on account of COVID-19, it has been decided to defer the implementation of NSFR guidelines by a further period of six months. Accordingly, the NSFR Guidelines shall come into effect from October 1, 2021.

Yours faithfully

(Usha Janakiraman)
Chief General Manager

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:

1. the excess comprises only of SLR securities; and

2. 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.

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.

5. 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:

1. 21.00 per cent as on June 30, 2023

2. 20.00 per cent as on September 30, 2023

3. 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 shift their excess SLR securities from the HTM category to available for sale (AFS)/ held for trading (HFT) to comply with the instructions as indicated in paragraph 5 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,

(Usha Janakiraman)
Chief General Manager

RBI/2020-21/93
DOR.CAP.BC.No.34/21.06.201/2020-21

February 5, 2021

All Commercial Banks
(Excluding Small Finance Banks, Payments Banks, RRBs and LABs)

Dear Sir/Madam,

Basel III Capital Regulations- Review of transitional arrangements

Please refer to circular DOR.BP.BC.No.15/21.06.201/2020-21 dated September 29, 2020 on ‘Basel III Capital Regulations- Review of transitional arrangements’.

2. In view of the continuing stress on account of COVID-19 and in order to aid in the recovery process, it has been decided to defer the implementation of the last tranche of 0.625 per cent of the Capital Conservation Buffer (CCB) from April 1, 2021 to October 1, 2021. Accordingly, the minimum capital conservation ratios in para 15.2.2 of Part D ‘Capital Conservation Buffer Framework’ of Master Circular, DBR.No.BP.BC.1/21.06.201/2015-16 dated July 1, 2015 on ‘Basel III Capital Regulations’, shall continue to apply till the CCB attains the level of 2.5 per cent on October 1, 2021.

3. The pre-specified trigger for loss absorption through conversion / write-down of Additional Tier 1 instruments (Perpetual Non-Convertible Preference Shares and Perpetual Debt Instruments), shall remain at 5.5 per cent of risk weighted assets (RWAs) and will rise to 6.125 per cent of RWAs from October 1, 2021.

Yours faithfully

(Usha Janakiraman)
Chief General Manager

RBI/2020-21/91
DOR.No.Ret.BC.36/12.01.001/2020-21

February 05, 2021

All Scheduled Banks

Dear Sir / Madam

Section 24 of the Banking Regulation Act, 1949 – Maintenance of Statutory Liquidity Ratio (SLR) –
Marginal Standing Facility (MSF) – Extension of Relaxation

Please refer to our circulars DOR.No.Ret.BC.52/12.01.001/2019-20 dated March 27, 2020, DOR.RRB.No.28/31.01.001/2020-21 dated December 4, 2020 and Press Release No.2020-2021/401 dated September 28, 2020 on Marginal Standing Facility (MSF), wherein the banks were allowed to avail of funds under the MSF by dipping into the Statutory Liquidity Ratio (SLR) up to an additional one per cent of their net demand and time liabilities (NDTL), i.e., cumulatively up to three per cent of NDTL. This facility, which was initially available up to June 30, 2020 was later extended in phases up to March 31, 2021 providing comfort to banks on their liquidity requirements and also to enable them to meet their Liquidity Coverage Ratio (LCR) requirements.

2. As announced in the Statement of Developmental and Regulatory Policies of February 05, 2021, with a view to providing comfort to banks on their liquidity requirements, banks are allowed to continue with the MSF relaxation for a further period of six months, i.e., up to September 30, 2021.

Yours faithfully

(Thomas Mathew)
Chief General Manager