Reserve Bank of India Directions, – 2021 on Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR).

In exercise of the powers conferred by Section 35 A of the Banking Regulation Act, 1949 and pursuant to Section 42 of the Reserve Bank of India Act, 1934 and Sections 18, 24 and 56 of the Banking Regulation Act, 1949 as amended
from time to time, the Reserve Bank of India being satisfied that it is necessary and expedient in the public interest so to do, hereby, issues the Directions hereinafter specified.

CHAPTER – I

PRELIMINARY

1. Short Title and Commencement
(a) These Directions shall be called the Reserve Bank of India Directions, -2021 on Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR).

(b) These Directions shall come into effect on the day these are placed on the official website of the Reserve Bank of India.

CHAPTER – II

APPLICABILITY

2.a) The provisions of these Directions shall apply to all Scheduled Commercial Banks (SCBs) (including Regional Rural Banks), Small Finance Banks (SFBs), Payments Banks, Local Area Banks (LABs), Primary (Urban) Co-operative Banks (UCBs), State Co-operative Banks (StCBs) and District Central Co-operative Banks (DCCBs) unless stated to the contrary.

b) The maintenance of CRR shall be reported to Reserve Bank of India under the following statutory returns:

• Form A Return for Scheduled Commercial Banks (including Regional Rural Banks (RRBs)), Small Finance Banks, Payments Banks and Local Area Banks
• Form B Return for Scheduled Co-operative Banks
• Form I Return for non-scheduled Co-operative Banks under Section 18 of the Banking Regulation Act, 1949, read with Section 56 thereof

c) The maintenance of SLR shall be reported to Reserve Bank of India under the following statutory returns:

• Form VIII Return (for SLR) for Scheduled Commercial Banks (including Regional Rural Banks), Small Finance Banks, Payments Banks and Local Area Banks;
• Form I Return (for SLR) for all Co-operative Banks under Section 24 of the Banking Regulation Act, 1949, read with Section 56 thereof

CHAPTER – III
DEFINITIONS

3. Definitions
a) In these Directions, unless the context otherwise requires, the terms herein shall bear the meaning assigned to them below:-

i) ‘Aggregate Deposits’ shall mean aggregation of demand and time deposits

ii) Apportionment of Saving Bank Account into demand liability and time liability: the bank shall undertake the apportionment of Saving Bank Account into demand liability and time liability as per the following procedure:

• The present practice of calculation of the proportion of demand liabilities and time liabilities by Scheduled Commercial Banks in respect of their savings bank deposits on the basis of the position as at the close of business on 30th September and 31st March every year (cf. RBI circular DBOD.No.BC.142/09.16.001/97-98 dated November 19, 1997) shall continue in the new system of interest application on savings bank deposits on a daily product basis;
• The average of the minimum balances maintained (in each account) in each of the months during the half year period shall be treated by the bank as the amount representing the “time liability” portion of the savings bank deposits. When such an amount is deducted from the average of the actual balances maintained during the half year period, the difference would represent the “demand liability” portion.
• The proportions of demand and time liabilities so obtained for each half year shall be applied for arriving at demand and time liabilities components of savings bank deposits for all reporting fortnights during the next half year.

iii) Approved Securities1/SLR securities:Following securities shall be considered as approved securities:

1. Dated securities of the Government of India issued from time to time under the market borrowing programme and the Market Stabilization Scheme;
2. Treasury Bills of the Government of India; and
3. State Development Loans (SDLs) of the State Governments issued from time to time under the market borrowing programme.
4. Any other instrument as may be notified by the Reserve Bank of India (As and when prescribed).

Explanation:

• For Form A Return and its Annex, bank should report the total investment in approved securities as per it’s investment book i.e. including encumbered securities.
• For SLR purpose, only unencumbered portion of investment in approved securities qualify as specified SLR assets. The following SLR securities, however, shall not be considered as encumbered securities for SLR purpose and hence they will also qualify as specified SLR asset:

1. Securities lodged with another institution for an advance or any other credit arrangement to the extent to which such securities have not been drawn against or availed of;
2. Securities offered as collateral to the Reserve Bank for availing liquidity assistance from Marginal Standing Facility (MSF) up to the permissible percentage of the total NDTL in India, carved out of the required SLR
   portfolio of the bank concerned;
3. Securities offered as collateral to the Reserve Bank for availing liquidity assistance under Facility to Avail Liquidity for Liquidity Coverage Ratio (FALLCR); and
4. Securities acquired by banks under RBI-LAF and market repo transactions.

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