The Reserve Bank of India (RBI), on July 25, 2024, notified the draft circular on Basel III Framework on Liquidity Standards – Liquidity Coverage Ratio (LCR) – Review of Haircuts on High Quality Liquid Assets (HQLA) and Run-off Rates on Certain Categories of Deposits.
The following has been stated-
•Banks shall assign an additional 5 per cent run-off factor for retail deposits which are enabled with internet and mobile banking facilities (IMB)1 i.e., stable retail deposits enabled with IMB shall have 10 per cent run-off factor and less stable deposits enabled with IMB shall have 15 per cent run-off factor.
•Unsecured wholesale funding provided by non-financial small business customers shall be treated in accordance with the treatment of retail deposits as at (a) above.
•Level 1 HQLA in the form of Government securities shall be valued at an amount not greater than their current market value, adjusted for applicable haircuts in line with the margin requirements under the Liquidity Adjustment Facility (LAF) and Marginal Standing Facility (MSF) described in RBI circular.
•In case a deposit, hitherto excluded from LCR computation (for instance, a non-callable fixed deposit), is contractually pledged as collateral to a bank to secure a credit facility or loan, such deposit shall be treated as callable for LCR purposes.
Comments on the draft circular are invited from banks and other stakeholders by August 31, 2024.
[Notification No. 2024-2025/770]
