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    RBI Circular on FALLCR Against Credit Disbursed to HFCs and NBFCs

    July 05, 2019

    RBI has decided to front-load the Facility to Avail Liquidity for Liquidity Coverage Ratio (FALLCR) scheduled to increase by 0.5% each in August and December 2019 and to permit banks to reckon, with immediate effect, the increase in FALLCR of 1.0% of the bank’s Net Demand and Time Liabilities (NDTL). RBI also announced that an Internal Working Group is reviewing the liquidity management framework and the recommendations of the Group are expected toward the middle of July 2019.

    FALLCR is scheduled to increase by 0.5% of Net Demand and Time Liabilities (NDTL) on August 01 and December 01, 2019, respectively. It has been decided that, with immediate effect, banks will be permitted to reckon this increase in FALLCR of 1.0% of the bank’s NDTL as Level 1 High Quality Liquid Assets (HQLA) for computing liquidity coverage ratio (LCR), to the extent of incremental outstanding credit to NBFCs and HFCs over and above the amount of credit to NBFCs/HFCs outstanding on their books as on date. The front-loading of FALLCR of 1%, exclusively meant for incremental exposure to NBFCs/HFCs, will form part of general FALLCR as and when the increase in FALLCR takes place as per original schedule on August 01 and December 01, 2019.

     

    Keywords: Asia Pacific, India, Banking, Basel III, LCR, HQLA, FALLCR, NBFC, HFC, Liquidity Risk, RBI

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