RBI in its circular dated October 13, 2022, notified that the amounts received by a bank from the National Credit Guarantee Trustee Company Ltd (NCGTC) towards claims in respect of guarantees invoked and held by them pending adjustment of the same towards the relative advances, need not be treated as outside liabilities for the purpose of computation of NDTL for CRR and SLR.
Previously, in terms of the Master Direction of RBI on CRR/SLR – 2021 amended on April 06, 2022, the liabilities mentioned below shall not form part of the liabilities of a bank for the purpose of CRR and SLR:
a)(i) Paid up capital, reserves, borrowings through instruments qualifying for Tier1 and additional Tier1 capital; any credit balance in the Profit & Loss Account of the bank; the amount of any loan /refinance taken from RBI, Exim Bank, NHB, NABARD, and SIDBI.
Provided that the funds collected by various branches of the bank or other banks for the issue and held pending finalization of allotment of the additional Tier1 preference shares shall have to be taken into account for the purpose of calculation of reserve requirements.
a)(ii) In the case of a State Co-operative Bank/District Central Co-operative Bank, any loan taken from the State Government or National Co-operative Development Corporation, any deposit of money representing reserve fund maintained by any co-operative society within the area of operation of the bank. In the case of a District Central Co-operative bank, also an advance is taken by it from the concerned State Co-operative Bank.
In respect of any advance granted by the State Co-operative Bank / District Central Co-operative Bank against the balance maintained with it, such balance is to the extent of the amount outstanding in it.
Provided further that any advance or other credit arrangement drawn and availed against approved securities shall not be included for NDTL computation for SLR purposes (in case of Scheduled StCBs) and for both CRR and SLR purposes (in case of other StCBs / District Central Co-operative Banks).
a)(iii) In the case of a Regional Rural Bank, any loan is taken by such bank from its sponsor bank.
a)(iv) Any advance taken by a Primary Cooperative Bank from the State Government, National Co-operative Development Corporation, State Co-operative bank of the State concerned, or District Central Co-operative Bank of the district concerned as also any advance or credit arrangement drawn or availed of against approved securities. In case of an advance granted against any balance maintained with it by a Primary Co-operative Bank, such balance to the extent of the amount outstanding in respect of such advance will be excluded from the NDTL computation for SLR (in case of Scheduled Primary Co-operative Bank) and for both CRR and SLR (in case of other Primary Co-operative Banks).
b) Net income tax provision;
c) Amount received from DICGC towards claims and held by the bank pending adjustments thereof;
d) Amount received from ECGC by invoking the guarantee;
e) Amount received from an insurance company on ad-hoc settlement of claims pending judgment of the Court;
f) Amount received from the Court Receiver;
g) The liabilities arising on account of utilization of limits under Bankers’ Acceptance Facility (BAF);
h) District Rural Development Agency (DRDA) subsidy kept in Subsidy Reserve Fund account in the name of Self Help Groups;
i) Subsidy released by NABARD under Investment Subsidy Scheme for Construction/Renovation/Expansion of Rural Godowns;
j) Subsidy released by Central/ State Government which is kept in zero percent fixed deposit account if the terms/conditions prescribed in this regard by the Government and the accounting / operating treatment given to zero percent FDR account are same as that of zero percent Subsidy Reserve Fund account;
k) Net unrealized gain/loss arising from derivatives transaction under trading portfolio;
l) Income flows received in advances such as annual fees and other charges which are not refundable; and
m) Bill rediscounted by a bank with eligible financial institutions as approved by RBI.
Consequently to the latest notification, the “amount received by the eligible banks from National Credit Guarantee Trustee Company Limited (NCGTC) by invoking the guarantee towards claims and pending adjustments thereof”, need not be treated as outside liabilities for the purpose of computation of NDTL for CRR and SLR.
The provisions of the above Directions shall apply to all Scheduled Commercial Banks (SCBs) (including Regional Rural Banks), Small Finance Banks (SFBs), Payments Banks, Local Area Banks (LABs), Primary (Urban) Co-operative Banks (UCBs), State Co-operative Banks (StCBs) and District Central Co-operative Banks (DCCBs) unless stated to the contrary.
Source: RBI circular