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India cbank considering cut in held-to-maturity limit for banks

Source : REUTERS
Last Updated: Wed, Jan 09, 2013 13:00 hrs

MUMBAI, Jan 9 (Reuters) - India's central bank is considering a proposal to bring down the held-to-maturity limit in debt for banks in a non-disruptive manner, Reserve Bank of India Deputy Governor H.R. Khan said on the sidelines of an event on Wednesday.

"We are working on that," Khan said, adding a decision was not finalised.

Held-to-maturity is a category of debt that banks must hold until redemption but which can be reshuffled once a year.

The limit is currently set at 25 percent but traditionally has been aligned with the banks' statutory liquidity ratio (SLR), or the mandated portion of deposits which banks must invest in government bonds and other approved securities, which is currently at 23 percent.

The RBI had said in October it was looking into a recommendation from a central bank committee to cut the HTM ceiling.

Khan also said the RBI was considering carving out a portion of the SLR for liquidity purposes, although he did not provide further details. (Reporting by Shamik Paul; Writing by Swati Bhat; Editing by Rafael Nam)



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