 "New norms likely to reduce Bank of Maharashtra's LCR by 5 basis point")
Bank of Maharashtra expects a 5 basis point (bps) reduction in its Liquidity Coverage Ratio (LCR) if the proposed guidelines are implemented, sources said.
The Reserve Bank of India (RBI) proposed revised LCR norms in late July 2023, suggesting that banks assign an additional 5 per cent run-off factor for retail deposits accessible through internet and mobile banking (IMB). As a result, stable retail deposits enabled with IMB will have a 10 per cent run-off factor, while less stable deposits enabled with IMB will have a 15 per cent run-off factor.
The rules, set to come into effect from April 1, 2025, will require banks covered under LCR norms to maintain a stock of high-quality liquid assets (HQLA) to cover the expected net cash outflows over the next 30 calendar days.
"The LCR is 109 per cent, and we are above the regulatory 100 per cent mark, so there is no issue. With these guidelines coming into effect, it should be around 104 per cent. We are working on many areas to ensure that core retail deposits go up," said an official at the bank aware of the development.
"The bank is experiencing good traction in deposits, especially within CASA, which is in the stable core deposit category. It has no immediate concerns about maintaining the LCR above the regulatory threshold," the official added.
In the quarter ended December 31, 2024, Bank of Maharashtra posted a 13.5 per cent year-on-year (Y-o-Y) growth in total deposits to Rs 2.79 trillion. Out of this, the ratio of low-cost CASA deposits stood at 49.28 per cent.
Banking sector officials are expected to meet with the RBI on Monday to discuss the proposed LCR norms, Expected Credit Loss (ECL) norms, and project financing norms, the official added.