The Reserve Bank of India on Wednesday extended the timeline for banks to use enhanced limits on held-to-maturity (HTM) investments till March 31, 2024. The RBI had set March 31, 2023 as the deadline for the dispensation of investments made by lenders in government securities.
The HTM limits would be restored from 23% to 19.5% in a phased manner starting from the quarter ending June 30, 2024.The increased limits under the HTM category were increased to 23% of net demand and time liabilities (NDTL), compared to 19% earlier. The limits were applicable on G-Secs eligible under statutory liquidity ratio (SLR) facilities. The relaxation was applicable on securities purchased between September 1, 2020 and March 31, 2023.
“With a view to enable banks to better manage their investment portfolios, it has been decided to extend the dispensation of enhanced HTM limit of 23% up to March 31, 2024 and allow banks to include securities acquired between September 1, 2020 and March 31, 2024 in the enhanced HTM limit,” the RBI said in a statement.
The RBI in April had directed banks to bring down the enhanced HTM limit to 19.5% in a phased manner. The excess SLR securities acquired by banks were to be reduced to 22% as on June 30, 2023, 21% as on September 30, 2023, 20% as on December 31, 2023 and 19.5% as on March 31, 2024.
The yield on the benchmark 10 year G-Sec jumped 0.026 points on Wednesday to 7.272% after the RBI raised the repo rate by 35 bps to 6.25%.