RBI issues fresh measures to bail out banks - Standard Chartered Securities

Instead of squeezing money (monetary tightening) from the system, the central bank will conduct an open market operation (OMO) to purchase (not sell) only long-term government bonds of INR 80bn from the market on August 23, 2013.

The RBI has also allowed banks to hold Statutory Liquidity Ratio (SLR) bonds in Held to Maturity (HTM) category at 24.5% of their respective total deposits or net demand and time liabilities (NDTL). Moreover, banks are now allowed to transfer Statutory Liquidity Ratio (SLR) bonds to HTM category from Available for Sale (AFS) or Held for Trading (HFT) categories up to the limit of 24.5% as one-time measure.

In addition, banks can spread over the net depreciation, if any, on account of MTM valuation of securities held under AFS/HFT categories over the remaining period of the current financial year (April 01 July 14) in equal installments.

Source : Equity Bulls

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