Page 51 - Banking Finance October 2020

RBI CIRCULAR

dated September 1, 2020 referred to above, allowed to both fund-based and non-fund based) that meet all the
hold under HTM category, SLR securities acquired on or four criteria listed in paragraph 5.9.3 of the above
after September 1, 2020 up to an overall limit of 22 per Master Circular may be considered as retail claims for
cent of NDTL, up to March 31, 2021. It has now been regulatory capital purposes and included in a regulatory
decided to extend the dispensation of the enhanced HTM retail portfolio. Claims included in this portfolio shall be
limit of 22 percent, for SLR securities acquired between assigned a risk-weight of 75 per cent, except as provided
September 1, 2020 and March 31, 2021, up to March in paragraph 5.12 of above Master Circular for non-
31, 2022, i.e. banks may continue to hold such excess performing assets. ‘Low value of individual exposures’
SLR securities in HTM category upto March 31, 2022. is one of the four qualifying criteria which prescribed
3. It has also been decided that the enhanced HTM limit that the maximum aggregated retail exposure to one
shall be restored to 19.5 per cent in a phased manner, counterparty shall not exceed the absolute threshold
beginning from the quarter ending June 30, 2022, i.e. limit of Rs. 5 crore.
the excess SLR securities acquired by banks during the 3. In order to reduce the cost of credit for this segment
period September 1, 2020 to March 31, 2021 shall be consisting of individuals and small businesses (i.e. with
progressively reduced such that the total SLR securities turnover of upto Rs. 50 crore), and also to harmonise
held in the HTM category as a percentage of the NDTL with the Basel guidelines, it has been decided that the
does not exceed: above threshold limit of Rs. 5 crore for aggregated
a. 21.00 per cent as on June 30, 2022 retail exposure to a counterparty shall stand increased
to Rs. 7.5 crore from the date of this circular. The risk
b. 20.00 per cent as on September 30, 2022
weight of 75 per cent will apply to all fresh exposures
c. 19.50 per cent as on December 31, 2022 and also to existing exposures where incremental
4. As per extant instructions, banks may shift investments exposure may be taken by the banks upto the revised
to/from HTM with the approval of the Board of limit of Rs. 7.5 crore. The other exposures shall
Directors once a year and such shifting will normally be continue to attract the normal risk weights as per the
allowed at the beginning of the accounting year. extant guidelines. Illustrations are given in the Annex.
However, in order to enable banks to shift their excess 4. All other instructions applicable in terms of the Master
SLR securities from the HTM category to AFS/HFT to Circular dated July 1, 2015 remain unchanged
comply with the instructions as indicated in paragraph 3
above, it has been decided to allow such shifting of the (Prakash Baliarsingh)
excess securities during the quarter in which the HTM Chief General Manager
ceiling is brought down. This would be in addition to the
shifting permitted at the beginning of the accounting Implementation of Section 51A of UAPA,
year.
1967: Updates to UNSC’s 1267/ 1989 ISIL
(Usha Janakiraman) (Da'esh) & Al-Qaida Sanctions List –
Chief General Manager
Addition of one entry
Regulatory Retail Portfolio – Revised RBI/2020-21/33
Limit for Risk Weight September 05, 2020
RBI/2020-21/53 1. Please refer to Section 51 of our Master Direction on
October 12, 2020 Know Your Customer dated February 25, 2016 as
amended on April 20, 2020, in terms of which
1. Please refer to paragraph 5 of the Statement on “Regulated Entities (REs) shall ensure that in terms of
Developmental and Regulatory Policies dated October Section 51A of the Unlawful Activities (Prevention)
9, 2020 on the limit for regulatory retail portfolio.
(UAPA) Act, 1967, they do not have any account in the
2. In terms of para 5.9 on “Claims included in the name of individuals/entities appearing in the lists of
Regulatory Retail Portfolios” of the Master circular individuals and entities, suspected of having terrorist
No.DBR.No.BP.BC.1/21.06.201/2015-16 dated July 1, links, which are approved by and periodically circulated
2015 on Basel III Capital Regulations, claims (including by the United Nations Security Council (UNSC).”

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