RBI's draft LCR norms: Banks likely to see 4-11% impact on earnings

According to analysts, banks with an LCR exceeding 130 per cent are relatively comfortable, though not many lenders boast such robust ratios

The Reserve Bank of India’s draft norms proposing an additional 5 per cent “run-off” for retail deposits in the liquidity coverage ratio (LCR) calculations threaten to slice bank earnings by 4-11 per cent as lenders will have to decelerate loan growth while taking measures to bolster sluggish deposit growth by offering higher interest rates, according to according to analysts.

Citing the increasing prevalence of mobile and internet banking in India, which enables depositors to easily withdraw their funds, the central bank has suggested an additional 5 per cent run-off factor for retail deposits with digital banking facilities.