RBI extends SLR holdings in HTM category till March 2022

Updated: Oct 10, 2020 10:59 AM

This dispensation is available to banks for securities acquired between September 1, 2020 and March 31, 2021.

The investment portfolio of banks is classified under held to maturity (HTM), available for sale (AFS) and held for trading (HFT) category.

By ANKUR MISHRA

In order to provide certainty to banks, Reserve Bank of India (RBI) on Thursday extended the time period for statutory liquidity ratio (SLR) holdings in held to maturity (HTM) category by one year till March, 2022. Earlier in September, the central bank had increased the limits of SLR holdings under HTM category to 22% from previous 19.5% of the net demand and time liabilities (NDTL) till March, 2021.This dispensation is available to banks for securities acquired between September 1, 2020 and March 31, 2021.

Bankers feel that move by RBI will provide cushion in terms of planning for them. “The opening of HTM window upto March 31, 2022 is a much needed move, otherwise we were worried about planning after March, 2021, ” a senior bank official told FE. “In the absence of this order, we were supposed to shift these securities from HTM category to available for sale (AFS) category from first quarter of next financial year.”

The investment portfolio of banks is classified under held to maturity (HTM), available for sale (AFS) and held for trading (HFT) category. The holding of securities under HTM provides cushion for banks from valuation changes.

The central bank said that it wants to give more certainty to the markets about the status of these investments in SLR securities after March 31, 2021. RBI further said that the HTM limits would be restored from 22% to 19.5% in a phased manner starting from the quarter ending June 30, 2022. It is expected that banks will be able to plan their investments in SLR securities optimally with a clear glide path for restoration of HTM limits, RBI further said.

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