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LCR maintenance
January 16 , 2022
1024 days
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- The Reserve Bank of India has increased the threshold limit for Banks to maintain the Liquidity Coverage Ratio (LCR).
- It will be on deposits and other ‘extension of funds’ received from non-financial small business customers from Rs 5 crore to Rs 7.5 crore.
- This is applicable on all Commercial Banks other than Regional Rural Banks, Local Area Banks, and Payments Banks.
- It is to align RBI’s guidelines with the Basel Committee on Banking Supervision (BCBS) standard and enable banks to manage liquidity risk more effectively.
- LCR promotes the short-term resilience of banks to potential liquidity disruptions.
- It will ensure that they have sufficient high-quality liquid assets (HQLAs) to survive an acute stress scenario lasting for 30 days.
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