Enhanced HTM Limit: Banks asked to progressive reduce excess SLR by March-end 2025 – The Hindu BusinessLine

Clipped from: https://www.thehindubusinessline.com/money-and-banking/enhanced-htm-limit-banks-asked-to-progressive-reduce-excess-slr-by-march-end-2025/article66239411.ece

Earlier this enhanced limit was available for securities acquired between September 1, 2020 and March 31, 2023

Mumbai: A woman walks past the Reserve Bank of India (RBI) headquarters, in Mumbai, Friday, Sept. 30, 2022. (PTI Photo/Shashank Parade)(PTI09_30_2022_000102B) | Photo Credit: SHASHANK PARADE

The Reserve Bank of India on Thursday said the special dispensation of enhanced Held to Maturity (HTM) limit of 23 per cent of deposits granted to banks for parking Government Securities and State Development Loans will be restored to 19.5 per cent in a phased manner, beginning quarter ending June 30, 2024.

The central bank said the excess Statutory Liquidity Ratio (SLR) securities – Government Securities and State Development Loans – acquired by banks during the period September 1, 2020 to March 31, 2024 – shall be progressively reduced to 19.50 per cent as on March 31, 2025.

So, the total SLR securities held in the HTM category (the category of investment portfolio maintained by banks with intention to hold securities up to maturity) as a percentage of their deposits should not exceed – 22 per cent as on June 30, 2024; 21 per cent as on September 30, 2024; 20 per cent as on December 31, 2024; and 19.50 per cent as on March 31, 2025.

Special dispensation

The RBI on Wednesday further extended the special dispensation of enhanced HTM limit of 23 per cent, allowing banks to include securities acquired between September 1, 2020 and March 31, 2024 under this limit.

Earlier this enhanced limit was available for securities acquired between September 1, 2020 and March 31, 2023.

This dispensation is with a view to enabling banks to better manage their investment portfolios. Securities parked in HTM are not subject to mark-to-market losses. So, banks are not required to make any provisioning for investment depreciation.

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