What changed
The SLR requirement for scheduled commercial banks was reduced from 25% to 24% of net demand and time liabilities (NDTL), effective December 18, 2010. This change was announced in the Mid-Quarter Review of Monetary Policy on December 16, 2010, and supersedes the previous SLR of 25% set in October 2009.
What it means for you
Banks can now deploy an additional 1% of their NDTL into higher-yielding assets like loans or investments, potentially boosting profitability. This move signals RBI's intent to ease liquidity and support credit growth, though banks must still maintain the required SLR assets as per existing guidelines.
What you must do
- Recalibrate your SLR asset portfolio to ensure compliance with the new 24% threshold from December 18, 2010.
- Review liquidity management strategies to deploy freed-up funds into lending or other profitable avenues.
- Update internal systems and reporting processes to reflect the revised SLR requirement.
- Communicate the change to treasury and compliance teams for seamless implementation.
Who it affects
All scheduled commercial banks (excluding Regional Rural Banks), Treasury departments managing SLR investments, Compliance and risk management teams
When does the new SLR of 24% take effect?
The reduced SLR of 24% of NDTL is effective from December 18, 2010, as per the RBI notification.
What assets qualify for SLR maintenance?
Banks must maintain assets as specified in RBI notification DBOD No Ret BC 40/12.02.001/2009-10 dated September 08, 2009, which typically include government securities and other approved instruments.
Does this change affect Regional Rural Banks?
No, the circular explicitly excludes Regional Rural Banks from this SLR reduction.