Issues in implementation of Basel III - Liquidity
ØBasel III requires a high level of liquidity to be
maintained through a pool of unencumbered liquid assets.
ØWhile Indian banks maintain a large pool of liquid
assets in compliance with the Statutory Liquidity Ratio, they may not
technically qualify as liquid assets under Basel III as these are not freely
available to banks for liquidity purposes. Requiring banks to maintain liquid assets over
and above the SLR could put them in a competitively disadvantageous position.
ØWe are, therefore, considering as to what extent the
SLR can be reckoned towards Basel III requirements for holding liquid assets.
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