What changed
RBI amended its September 2009 notification to insert a proviso that SLR securities obtained via the LAF window are ineligible for SLR maintenance. Additionally, RBI clarified that funds borrowed under LAF continue to be excluded from Demand and Time Liabilities (DTL) for CRR and SLR computation. RBI also announced that SLR status of government securities will be published in press releases at issuance and an updated list will be available on its website.
What it means for you
Banks can no longer use LAF-acquired securities to meet SLR requirements, which may tighten liquidity management and force banks to hold more eligible securities from other sources. The exclusion of LAF borrowings from DTL/NDTL remains unchanged, so banks' CRR and SLR liability base is unaffected by these borrowings. The new transparency measures help banks track SLR-eligible securities more easily.
What you must do
- Review your SLR portfolio to ensure no LAF-acquired securities are counted as eligible assets.
- Update internal systems and reporting processes to exclude LAF securities from SLR calculations.
- Monitor RBI press releases and the 'Database on Indian Economy' link for updated SLR securities lists.
- Train treasury and compliance teams on the revised eligibility rules for SLR maintenance.
Who it affects
All scheduled commercial banks (excluding Regional Rural Banks), Treasury departments, Compliance and risk management teams
Does this circular affect the treatment of LAF borrowings for CRR purposes?
No. The circular clarifies that funds borrowed under LAF continue to be excluded from Demand and Time Liabilities for both CRR and SLR computation, as per the existing master circular.
How will I know which government securities are SLR-eligible going forward?
RBI will indicate the SLR status of each government security in the press release at the time of issuance, and an updated list will be posted on the RBI website under 'Database on Indian Economy'.