MUMBAI: Non-public banks might want to elevate extra secure funds like fastened deposits that clients can not prematurely withdraw and minimize credit score progress to take a position extra in govt securities to fulfill new liquidity protection norms issued by RBI.
Whereas RBI classifies digitally operated accounts as scorching cash, bankers don’t see any reversal of digital channels. Nevertheless, the brand new norms might put some stress on curiosity margins. Scores company Icra estimates the demand for liquid belongings (govt securities) to be round Rs 4 lakh crore due to the brand new norms.
Two main modifications introduced by RBI (efficient April 2025) on Friday relate to accounts accessible through web and cell banking and the valuation of govt securities used as collateral. RBI has assigned the next ‘run-off’ price which requires banks to carry extra liquidity towards digitally operated accounts.
“If we assume 70% of the deposits meet these standards (web or cell banking deposits) and there’s a 2% haircut to prime quality liquid belongings, the affect for our protection universe on LCR can be round 16-20% which is giant and worrisome. Many personal sector banks have an inner threshold of 110% and LCR will drop under the brink ranges,” Suresh Ganapathy, a analysis analyst with Macquarie, mentioned.
In keeping with a research by Macquarie, many personal banks will see their LCR dropping under their inner threshold of 110%. HDFC Financial institution is at present at 123% and can drop to 106% after the brand new norms, whereas ICICI Financial institution, which is at 121%, will drop to 105%. Axis Financial institution will drop from 120% to 104% and IndusInd Financial institution from 118% to 102%. Amongst public sector lenders, SBI will drop from 131% to 111% and Financial institution of Baroda from 125% to 106%.
“Presently, our liquidity protection ratio is 125% (of prescribed RBI threshold). The brand new norms will carry it right down to 115%,” mentioned AK Goel, chairman, Punjab Nationwide Financial institution. He added that this is able to not change the financial institution’s technique and it could proceed selling digital financial institution accounts.
Whereas RBI classifies digitally operated accounts as scorching cash, bankers don’t see any reversal of digital channels. Nevertheless, the brand new norms might put some stress on curiosity margins. Scores company Icra estimates the demand for liquid belongings (govt securities) to be round Rs 4 lakh crore due to the brand new norms.
Two main modifications introduced by RBI (efficient April 2025) on Friday relate to accounts accessible through web and cell banking and the valuation of govt securities used as collateral. RBI has assigned the next ‘run-off’ price which requires banks to carry extra liquidity towards digitally operated accounts.
“If we assume 70% of the deposits meet these standards (web or cell banking deposits) and there’s a 2% haircut to prime quality liquid belongings, the affect for our protection universe on LCR can be round 16-20% which is giant and worrisome. Many personal sector banks have an inner threshold of 110% and LCR will drop under the brink ranges,” Suresh Ganapathy, a analysis analyst with Macquarie, mentioned.
In keeping with a research by Macquarie, many personal banks will see their LCR dropping under their inner threshold of 110%. HDFC Financial institution is at present at 123% and can drop to 106% after the brand new norms, whereas ICICI Financial institution, which is at 121%, will drop to 105%. Axis Financial institution will drop from 120% to 104% and IndusInd Financial institution from 118% to 102%. Amongst public sector lenders, SBI will drop from 131% to 111% and Financial institution of Baroda from 125% to 106%.
“Presently, our liquidity protection ratio is 125% (of prescribed RBI threshold). The brand new norms will carry it right down to 115%,” mentioned AK Goel, chairman, Punjab Nationwide Financial institution. He added that this is able to not change the financial institution’s technique and it could proceed selling digital financial institution accounts.
