RBI has decided to reduce statutory liquidity ratio, the portion of funds which banks are required to park in treasury bills and other instruments, by 0.25% every quarter beginning January. The calibrated reduction in statutory liquidity ratio (SLR) will continue till it reaches18%. The first reduction of 25 basis points taken effect in the quarter commencing January 2019 at 19.25%.
In the 4th bi-monthly policy statement 2017-18 RBI has announced that the SLR requirement of banks has been reduced to 19.5% from existing 20 % with effect from October 14, 2017.
As per present rule, banks are permitted to exceed the limit of 25% in total investments under HTM category subject to excess investments comprise of SLR securities and total SLR securities held under HTM category are not more than 20.5% of NDTL. In order to align the SLR holdings under HTM category with mandatory SLR, the Apex bank has reduced the HTM category ceiling from 20.5% to 19.5% in a phased manner, i.e. 20 per cent by December 31, 2017 and 19.5 per cent by March 31, 2018.