Module: | KYC, NPAs, Advances & Investment Valuations
Q233: Which of the following statements regarding the classification of SLR securities are correct?
1. SLR securities acquired to manage everyday liquidity needs must generally be classified under AFS if they meet SPPI criteria.
2. SLR securities acquired for meeting LCR requirements must always be classified under AFS.
3. If a bank requires flexibility to routinely sell securities before maturity, they should be classified under AFS rather than HTM.
4. SLR status automatically mandates HTM classification.
2. SLR securities acquired for meeting LCR requirements must always be classified under AFS.
3. If a bank requires flexibility to routinely sell securities before maturity, they should be classified under AFS rather than HTM.
4. SLR status automatically mandates HTM classification.
✅ Correct Answer: B
Statements 1 and 3 are correct.
If the objective is to manage everyday liquidity or requires flexibility to routinely sell securities, the correct classification is AFS.
Statement 2 is incorrect because securities held for LCR do not necessarily have to be AFS; they can be HTM if the bank intends to liquidate them only during stress scenarios rather than routinely.
If the objective is to manage everyday liquidity or requires flexibility to routinely sell securities, the correct classification is AFS.
Statement 2 is incorrect because securities held for LCR do not necessarily have to be AFS; they can be HTM if the bank intends to liquidate them only during stress scenarios rather than routinely.