The Reserve Bank of India on Friday said it has decided to enhance commercial banks' Held to Maturity (HTM) limit from the existing 22 percent to 23 percent of Net Demand and Time Liabilities (NTDL) till March 23, 2023. In a circular, the central bank said banks will be allowed to include securities acquired between September 1, 2020, and March 31, 2022.

As per RBI's "Statement on Development and Regulatory Policies of the Monetary Policy Statement, 2022-23" dated April 8, 2022, and Section 6(iv)(a) of Master Direction -- Classification, Valuation and Operation of Investment Portfolio of Commercial Banks (Directions), 2021, dated August 25, 2021, banks currently have a special dispensation of enhanced HTM limit of 22 percent of NTDL for Statutory Liquidity Ratio (SLR) eligible securities acquired between September 1, 2020, and March 31, 2022, until March 31, 2023.

"The enhanced HTM limit of 23 percent shall be restored to 19.5 percent in a phased manner, beginning from the quarter ending June 30, 2023," the RBI circular read.

The circular explained that excess SLR securities acquired by banks between September 1, 2020, and March 31, 2023, will be progressively reduced in way to ensure that the total SLR securities held in the HTM category as a percentage of the NDTL do not exceed 22 percent as on June 30, 2023; 21 percent as on September 30, 2023; 20 percent as on December 31, 2023; and 19.50 per cen as on March 31, 2024.

The RBI said the relevant sections of the Master Direction are being amended to reflect these changes, which come into force with immediate effect.

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First Published:Apr 8, 2022 5:35 PM IST