MUMBAI: The Reserve Bank of India relaxed Basel III-mandated liquidity coverage ratios for banks, allowing the sector to apply an additional one percentage point of the deposits they currently hold as government bonds under their statutory liquidity ratios (SLR).
Banks can now apply up to 11 percent of their deposit base held as SLR - or government securities that banks must hold with the RBI - from 10 percent earlier when calculating their liquidity coverage ratios to meet Basel III requirements, the RBI said in a statement on Thursday.
Liquidity coverage ratio is a capital measure mandated under Basel III norms requiring banks to maintain highly-liquid assets, including government securities, to meet any sudden short-term outflows.
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