- It will be eligible as Level 1 High-Quality Liquid Assets (HQLA) for LCR computation.
- The circular by the RBI came after the central bank received concerns from the banks regarding the treatment of SDF under the Liquidity Risk Management Framework.
- This guideline applies to all commercial banks, except Regional Rural Banks, Local Area Banks, and Payments Bank, with immediate effect.
- SDF is a tool that facilitates an overnight transfer of excess liquidity (deposit) from banks to the RBI without any collateral (Government Securities).
- LCR is the minimum amount of High-Quality Liquid Assets (HQLA) that are mandatorily held by the banks so as to increase the short-term resilience of liquidity risk.
Question:
Q.1 Recently a circular was released by ____ regarding the computation of the LCR.a. RBI
b. SEBI
c. NABARD
d. SIDBI
