The average of the minimum balances maintained (in each account) in each of the months during the half-year period is treated by the bank as the amount representing the “time liability” portion of the savings bank deposits. When the ‘time liability’ amount so arrived is deducted from the average of the actual balances maintained during the half-year period, the difference would represent the “demand liability” portion.
Illustration:
The minimum balance of an SB account during the months of April 2022 to September 2022 is as under.
| Month | Minimum Bal. | Average Bal. |
| April | 12000 | 14000 |
| May | 10000 | 14000 |
| June | 12500 | 15500 |
| July | 15000 | 18000 |
| August | 9500 | 12500 |
| September | 13000 | 16000 |
| Total | 72000 | 90000 |
| Average | 12000 | 15000 |
Average Minimum Balance: Rs.12000
Average Balance (April to September): Rs.15000
Calculation of percentage of time liability and demand liability of the above account:
Time liability is Rs.12000, out of Rs.15000 i.e 80 percent
Demand Liability is (Rs15000-Rs 12000) Rs.3000 i.e 20 percent.
Under Section 24 and Section 56 of the Banking Regulation Act, 1949, every Scheduled Commercial Bank (Including Regional Rural Banks), Local Area Bank, Small Finance Bank, and Payments Bank in India are required to maintain Cash Reserve Ratio (CRR), Statutory Liquidity Ratio (SLR), and Liquidity Adjustment Facility (LAF) based on their NDTL (Net Demand and Time Liabilities)
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.
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