Module: | Priority Sector, Consumer Protection & Digital Lending
Q74: Scenario: 'Bank Beta' has an SLR requirement of ₹200 Crore. It holds ₹198 Crore in unencumbered G-Secs, and ₹5 Crore in G-Secs that it has pledged to the RBI to borrow funds under the standard Repo window (LAF). What is the bank's SLR status?
✅ Correct Answer: B
The correct answer is B. To compute SLR compliance, only unencumbered approved assets can be considered.
The bank requires a total of ₹200 Crore.
It possesses ₹198 Crore in fully unencumbered G-Secs.
However, the ₹5 Crore in G-Secs pledged to the RBI under the standard Liquidity Adjustment Facility (LAF) Repo window are legally encumbered, meaning the bank no longer has free access to liquidate them in a crisis.
Consequently, these ₹5 Crore are disqualified from the SLR calculation.
The total eligible SLR assets remain exactly ₹198 Crore, creating a ₹2 Crore shortfall against the ₹200 Crore requirement, thereby rendering the bank non-compliant and liable for penal interest.
The bank requires a total of ₹200 Crore.
It possesses ₹198 Crore in fully unencumbered G-Secs.
However, the ₹5 Crore in G-Secs pledged to the RBI under the standard Liquidity Adjustment Facility (LAF) Repo window are legally encumbered, meaning the bank no longer has free access to liquidate them in a crisis.
Consequently, these ₹5 Crore are disqualified from the SLR calculation.
The total eligible SLR assets remain exactly ₹198 Crore, creating a ₹2 Crore shortfall against the ₹200 Crore requirement, thereby rendering the bank non-compliant and liable for penal interest.