The
Presidents/ Chief Executives
All Banks
Dear
Sirs/Madam,
MASTER
CIRCULAR-MAINTENANCE OF
STATUTORY LIQUIDITY REQUIREMENT (SLR)
In
terms of Section 29 of the Banking Companies Ordinance,
1962, banks are required to maintain Statutory Liquidity
Requirement in cash, gold or unencumbered approved securities
valued at a price not exceeding “the lower of the
cost or the current market price” equivalent to an
amount which shall not at the close of business on any day
be less than “such percentage” of the total
of their time and demand liabilities in Pakistan, as may
be notified by the State Bank from time to time. Presently,
banks are required to maintain the liquid assets @ 15% (excluding
Statutory Cash Reserve maintained under section 36(1) of
the State Bank of Pakistan Act, 1956) of their total time
and demand liabilities in Pakistan with effect from 12th
July, 1999.
2)
In order to facilitate the banks, instructions issued from
time to time on the subject have been consolidated and are
given hereunder: -
i) The Total Time and Demand Liabilities (TDL) for the purpose
of determining Statutory Liquidity Requirement (SLR) and
Cash Reserve Requirement (CRR) shall include the following
heads of accounts of Weekly Statement of Position (WSP):
a) Demand Deposits (General) (c) Time Deposits (General)
b) Other Demand Liabilities d) Other Time Liabilities
The detail of items included in the above heads of accounts
(for reference) is given in the enclosed Annexure-A.
ii) In terms of Section 36 of State Bank of Pakistan Act,
1956 and Section 29 of the Banking Companies Ordinance,
1962, “Liabilities” shall not include the paid
up capital or the reserves or any credit balance in the
profit and loss account of the Banking Company or the amount
of any loan taken from the State Bank or any such liabilities
as may be notified by the State Bank for the purpose. Accordingly,
the following liabilities of WSP shall not be taken into
account while computing the TDL:
Liabilities |
Main
‘head ‘ of WSP |
Foot
Note of WSP |
Deposits
from banks (Demand) |
01-02 |
- |
Borrowing
from banks (Demand) |
01-03 |
- |
Deposits
from banks (Time) |
02-02 |
- |
Borrowings
from banks (Time) |
02-03 |
- |
Money
at call & short notice in Pakistan |
05-00 |
- |
Special
Exporter’s A/c |
- |
81-00 |
F.E.25
deposits
(against which banks are separately required to maintain
CRA & SCRA in US $ ) |
01-01
& 02-01 |
80.03
(i) |
All
liabilities, except those specifically listed above, shall
be included in TDL of banks in Pakistan for the purpose
of computing SLR and CRR. For SLR purpose, TDL at the close
of business on every Saturday (and if Saturday is a holiday,
on the previous working day) shall continue to be taken
into account, upto a day preceding the next weekend i.e.
Friday.
iii)
The composition of liquid assets and their reporting in
the Weekly Statement of Position shall be as under:-
Liquid
Assets |
Main
‘head ‘ of WSP |
Foot
Note of WSP |
Cash
in PakistanPlus Foreign Currency held in Pakistan |
Code.11.00Code
13.01 |
|
Balances
with SBP (In Current A/C.) |
Code
12.01 |
Code
53.01&02 |
PLS
Term Deposit Account with SBP. |
Code
12.01 |
Code
53.06 |
Balance
with NBP. |
Code
12.02 |
- |
Un-encumbered
Approved Securities (List as per Annexure B) |
Code
17.01to 17.04 |
Code
54.00 |
Deposits
under Section13 (3) of BCO, 1962 (Capital maintained
by Foreign Banks) |
Code
12.01&Code 17.00 |
Code
56.01& 03Code 56.02 |
Share
Capital of Khushali Bank |
Code
17.05 |
Code
90.00 |
iv)
In terms of Section 29 ibid, “Balance (of banks) with
SBP” is a part of liquid assets, therefore, the monitoring
of compliance with prescribed SLR is done by the State Bank
by including the prevailing percentage of CRR. Presently,
SLR is 15% (excluding CRR of 5% of TDL on weekly average
basis) with effect from 12th July 1999. However, it may
be clarified that while monitoring compliance with SLR the
State Bank clubs CRR with SLR in terms of Section 29, which
comes to 20% (including CRR of 5%) of TDL. The banks are
required to maintain this level of SLR (20%) at the close
of business on every day.
3)
In case of shortfall in maintenance of liquid assets, banks
are liable to pay penalty @ Rs.86/- per hundred thousand
or part thereof per day. The penalty of shortfall in maintenance
of liquid assets is charged by the concerned SBP:BSC (Bank)
office on the basis of monthly return as per Form-IX. Furthermore,
in the case of default in meeting prescribed SLR on two
or more consecutive weekends, the penalty for the days during
the weekends will be levied on the basis of shortfall in
SLR as of the previous weekend unless the shortfall on any
of the week days is specifically pointed out by the bank
in Form IX (e.g. if there was a default in meeting SLR on
the weeks ended 8th and 15th May 2004, the penalty for the
days during these weekends i.e. from 9th to 14th May will
be charged on the basis of amount of shortfall in SLR on
the week ended 8th May, 2004).
4)
This circular supersedes all previous instructions on the
subject.