The Reserve Bank Of India (RBI) has released a notification on September 1, 2020, for the banks about the Statutory Liquidity Ratio (SLR) holdings held in the Held To Mature (HTM) category.
The term Statutory Liquidity Ratio means that it is a ratio of mandatory liquid assets to total deposits to be held by a bank at all times and the SLR amount or percentage gets sets up by the Reserve Bank Of India and helps it to meet with the changing monetary policy.
The notification published by RBI said, “Currently, banks are permitted to exceed the limit of 25 per cent of the total investments under Held to Maturity (HTM) category, provided the excess comprises only of SLR securities and total SLR securities held under HTM category is not more than 19.5 per cent of Net Demand and Time Liabilities (NDTL) as on the last Friday of the second preceding fortnight. On a review, it has been decided to allow banks to hold under HTM category, SLR securities acquired on or after September 1, 2020, up to an overall limit of 22 per cent of NDTL, up to March 31, 2021, which shall be reviewed thereafter.”
The type of Investments made by the banks that are intended to be held until its maturity is only called Held to Maturity (HTM) investments. Generally, the Banks try to hold securities acquired by them with the intention to hold them up to maturity under the HTM category and only debt securities investments are allowed to be held in the HTM category but have a few exceptions like equity held in subsidiaries, etc..
With Warm Regards,