RBI has prescribed that banks keep CSF or at least 100 percent.
To encourage banks to provide more, the Bank of the Reserve of India (RBI) has reduced runoff rates assigned to retail deposits and deposits of ‘non -financial corporations’ for the calculation of the liquuidity coverage ratio (CSF).
The liquidity coverage index (CSF) requires that the banks maintain high quality liquid assets (HQLA) to meet 30 days of net jump in stressed conditions. RBI has prescribed that banks keep CSF or at least 100 percent.
Run-Offer means the possibility that deposits are removed/ transferred, even in stressed situations.
According to the final guidelines on the ‘Basel III framework on the liquuidity standards, which will enter into force as of April 1, 2026, RBI said that a bank must assign an additional runoff factor of 2.5 percent (against 5 percent and mobile banking facilities (IMB).
Stable retail deposits enabled with Internet bench (IMB) will have a scurrent factor of 7.5 percent (10 percent currently applicable) and less stable deposits enabled will have 12.5 percent registration percent).
In addition, the category “Other Legal Entities” (OLE) will consist of all deposits and other funds of insurance and financial institutions and institutions in the “financial services business”.
Therefore, the financing of non -financial entities such as trusts (educational/religious/charitable), Association of Persons (AOC), associations, properties, limited liability associations and other incorporated entities, etc.
These entities will attract a runoff rate or 40 percent (compared to 100 percent currently prescribed 4), unless the previous entities are treated as customers of small businesses (SBC) under the CSF framework.
Liquidity resilience
RBI said that these amendments would help improve the liquuidity resilience of the banks and further align the guidelines with the global standards while guaranteeing that such improvement is carried out in a non -disruptive manner.
Anil Gupta, qualifications of the financial sector of the Senior VP & Co, ICRA, observed according to the estimate of RBI, the reported CSF of the banking system will improve in 6 percent of the axis or on December 31, 2024.
“With an estimated HQLA of almost.
.
Bank expert V Viswanathan observed that to compensate for the impact of runoff factors for stable and unstable deposits and HQLA reduction if a bank has borrowed under the marginal installation of permanence or the liquidity adjustment center, RBI has now allowed deposits and other non -financial financing funds to attract an execution rate or 40 percent One hundred, 100 percent, is not attended to 100 percent, is not the minimum deposit.
“This means that the output flows of the above ₹ 40 only for a ₹ 100 accepted deposit. All certificates of deposits, FDS and current account balances above ₹ 5 million rupees could in the previous category, attracting the conversion factor of 40.
Posted on April 21, 2025