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Informist, Monday, Apr. 21, 2025

 

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--RBI issues final guidelines on revised LCR framework
--RBI: Revised LCR framework to come into effect from Apr 1, 2026
--RBI: Extra 2.5% run-off for bks' internet, mobile banking-enabled deposits
--RBI: Undertook impact analysis of revised LCR framework for Dec-end data
--RBI: Estimate banks' LCR will improve by 600 bps due to revised framework
--RBI:Confident revised LCR framework will enhance bks' liquidity resilience
--RBI: New LCR norms to align India with global standards non-disruptively
--RBI: Banks' wholesale funding from non-fincl entities to have 40% run-off

 

NEW DELHI – The Reserve Bank of India Monday said that banks will have to assign an additional 2.5% run-off factor for retail deposits which are enabled with internet and mobile banking facilities, as part of the revised Liquidity Coverage Ratio framework, which will come into effect from Apr. 1, 2026.

 

The extra 2.5% run-off rate on such deposits prescribed by the RBI is lower than the 5% rate initially suggested in the draft guidelines published in July last year. The RBI issued the final guidelines on the revised LCR norms after analysing the feedback carefully, the central bank said. 

 

As per the new guidelines, banks will have to assign a 7.5% run-off factor on stable retail deposits enabled with internet and mobile banking facilities, compared to the current 5%. For less stable deposits enabled with internet and mobile banking facilities, a 12.5% run-off factor will have to be assigned against 10% prescribed at present, the RBI said.

 

Further, the RBI has rationalised the composition of wholesale funding from 'other legal entities' in the final Liquidity Coverage Ratio norms. Consequently, funding from non-financial entities like trusts, partnerships, and Limited Liability Partnerships should attract a lower run-off rate of 40% as against 100% currently, the central bank said.

 

Under the final guidelines, level 1 high-quality liquid assets in the form of government securities should be valued at an amount not greater than their current market value, adjusted for applicable haircuts in line with the margin requirements under the Liquidity Adjustment Facility and Marginal Standing Facility, the RBI said. This has remained unchanged from the draft guidelines.

 

Banks had pushed back against the draft LCR norms as the proposed changes were expected to raise the quantum of outflows against which banks must maintain liquidity buffers. The RBI said that it undertook an impact analysis of the above measures based on data submitted by banks, as on Dec. 31. "It is estimated that the net impact of these measures will improve the LCR of banks, at the aggregate level, by around 6 percentage points as on that date," the central bank said.

 

"Further, all the banks would continue to meet the minimum regulatory LCR requirements comfortably. Reserve Bank is sanguine that these measures will enhance the liquidity resilience of banks in India, and further align the guidelines with the global standards in a non-disruptive manner."  End

 

Reported by Shubham Rana

Edited by Saji George Titus

 

 

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