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Banks' overnight SDF balances eligible for LCR computation: RBI

Circular embraces all commercial banks, leaves out local area banks, RRBs and payments banks

RBI
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RBI has been permitting banks to use a progressively larger proportion of SLR bonds to be used for LCR computation

Bhaskar Dutta Mumbai
Overnight balances held by banks with the Reserve Bank of India under the Standing Deposit Facility (SDF) will be eligible as level-1 high quality liquid assets for the computation of Liquidity Coverage Ratio, the central bank said on Wednesday.

RBI made the announcement after banks sought clarity on the treatment of SDF under the Liquidity Risk Management Framework.

RBI’s circular, which comes into effect immediately, applies to all commercial banks, but leaves out local area banks, regional rural banks and payments banks, the central bank said.

SDF was institutionalised this April and replaced the reverse repo rate as the lower

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First Published: Nov 23 2022 | 9:16 PM IST

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