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Good, bad and ugly Mega merger is on Greet Lakshmi the banking robot A new development bank rising in the east… Banking on Risk Capital base of regional rural banks raised Insatiable appetite for credit Banking overhauling or reorganisation? Grows Bigger Why priority status? Banking in Telangana All that glitters is not gold... LVB- A supermarket of financial services The collaboration suite of cyber criminals Anytime banking to anywhere banking One down in private sector Emerging crisis Needed a Banking Atlas Monetary policy continues to adopt dis-inflationary path Just 660 days! Target over-ambitious... Rationalised Well-lived... Two banks: their jubilees and performances Ernakulam excels... Small is ‘more’ beautiful A bank for women, by women Holy or unholy? New bank licences, at last... Small finance payment banks... From lazy banking to easy banking Stage set for Indian ‘avatar’ of foreign banks It’s a war on black money, support it. Drastic decline in asset quality New capitals of Migrant banks Why any time money? Payment banks have arrived United India Insurance - Rs 110 crore losses have been claimed till now due to floods in Tamil Nadu Financial inclusion vs unclaimed deposits Growing volume of stressed assets… Who is the real beneficiary? Reaching the Unreached… Smart banking in smart cities Growing gainfully Managing NPAs... Aadhaar, niraadhaar and banking Hesitancy in announcing year-end results Cautious and considerate Another route for achieving financial inclusion Reaching out: is it slowing down? Targets continue to be ad hoc Nothing much can happen…. Cradle of banks to a smart city... Drop in SLR- sparing lendable resources Lacklustre credit expansion Too big to fail and too small to sail Ferrying digital banking to Lakshadweep Bottomlines shrink, bad loans rise... Thirty more cities seek to become SMART Small finance banks offer high interest rates Perhaps small is more beautiful than big! Cut in repo rate – lower than expected How okay are new banks? Fund healthcare clinics in villages... Indian customers are tech savvy A development bank for BRICS How ‘secure’ are the secured loans? Merger mania haunts banks Bank deposits account for 46.3 per cent of household savings Governance in Reverse Gear? The paradox: clamour for the Goliath and David What is the priority – mergers or NPA reduction? Big bank merger, bigger expectations
 
Drop in SLR- sparing lendable resources

Strictly monitoring the Statutory Liquidity Ratio (SLR) to be maintained by all banks, the Reserve Bank of India has been using one of the age-old monetary control mechanisms, almost since its inception. In the Second Bi-monthly Monetary Statement of 2014-15, Governor of Reserve Bank of India has “reduced the SLR of scheduled commercial banks by 50 basis points from 23.0 per cent to 22.5 per cent of their Net Demand and Time Liabilities (NDTL) with effect from the fortnight beginning 14 June, 2014.”  By this gesture, the lendable resources of the banking system would be increased by about Rs 40,000 crore.

Reserve Bank of India has been empowered to use the SLR mechanism to impound up to 40 per cent of the demand and time liabilities – namely total deposits - of commercial banks. At one time - in September 1990- it was as high as 38.50 per cent. Banks have become over the years a captive source for investing in government securities whenever the SLR is raised. Spendthrift state governments easily raise funds through this process from banks and they are euphemistically called public debt. A gradual reduction in the SLR is desirable to curtail deficit financing in state budgets. Similarly it is necessary to examine the need for stipulating a more reasonable level for Cash Reserve Ratio (CRR). The central bank can raise it up to 15 per cent, if required. In the past, when bank failures were common, a high CRR was an expedient safety measure. It was 9 per cent in 2008. It has been gradually brought down to 4 per cent at present.

Author : Dr N K Thingalaya
Reported On : Jul 02,2014
Sector : Banking
Shoulder : Public Sector Banks
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