RBI cuts statutory liquidity ratio by 0.5%; frees Rs 57,000 cr for lending

New Delhi: The Reserve Bank on Wednesday reduced the Statutory Liquidity Ratio (SLR), the portion of deposits held by banks in government securities, by 0.5 percent to 19.5 percent, freeing over Rs 57,000 crore to bank funds for lending. “As a part of the transition to a Liquidity Coverage Ratio (LCR) of 100 percent by 1 January, 2019, it is proposed to reduce the SLR by 50 basis points from 20 percent to 19.50 percent of banks’ net demand and time liabilities (NDTL) from the fortnight commencing 14 October, 2017,” it said. According to bankers, it will not much of the difference as several banks are holding in excess of statutory requirement. Following the announcement, shares of banks witnessed a surge on the stock market. “The ceiling on SLR securities under ‘Held to Maturity’ (HTM) will also be reduced from 20.25 percent to 19.50 percent of banks’ NDTL in a phased manner, i.e., 20.00 percent by 31 December, 2017 and 19.50 percent by 31 March, 2018,” the statement on developmental and regulatory policies said. [caption id=“attachment_4109673” align=“alignleft” width=“380”]  Reuters.[/caption] RBI had last cut SLR in its June policy by 0.5 percent to 20 percent. Coming down heavily on banks, RBI said, it is imperative to be sensitive to the requirements of senior citizens and differently abled persons notwithstanding the need to push digital transactions and use of ATMs. It has been reported that banks are discouraging or turning away senior citizens and differently abled persons from availing banking facilities at branches, it said. Banks have been instructed to put in place explicit mechanisms for meeting the needs of such persons so that they do not feel marginalised, it said. “Ombudsmen will also be advised to pay heed to complaints in this context. Necessary instructions in this regard will be issued by end-October 2017,” it said. Noting that trading on electronic platforms is being encouraged across the world, it said, it enhances pricing transparency, processing efficiency and risk control. It also enables better market surveillance and, therefore, discourages market abuse and unfair trading practices. The Reserve Bank will soon put in place a framework for authorisation of electronic trading platforms (ETP) for financial market instruments regulated by the Reserve Bank. “A draft framework will be placed on the website of the Reserve Bank for public feedback by end-October 2017,” it said.