CURRENT AFFAIRS

Detailed explanation-1: -The central bank has reduced the liquidity coverage ratio (LCR) requirement for banks to 80 per cent from 100 per cent with immediate effect as a relief to these lenders.

Detailed explanation-2: -Accordingly, the total HQLA carve out from the mandatory SLR, which can be reckoned for meeting LCR requirement will be 18 per cent of NDTL (2 per cent MSF plus 16 per cent FALLCR). Applicability: 5.

Detailed explanation-3: -Cash Reserve Ratio (CRR) is the share of a bank’s total deposit that is mandated by the Reserve Bank of India (RBI) to be maintained with the latter as reserves in the form of liquid cash. Click here to know about SLR & Repo Rate. Current cash reserve ratio is at 4%, this will be changed to 4.5% from May 21st.

Detailed explanation-4: -But what does the LCR (liquidity coverage ratio) mean? Put simply, the liquidity coverage ratio is a term that refers to the proportion of highly liquid assets held by financial institutions to ensure that they maintain an ongoing ability to meet their short-term obligations (i.e., cash outflows for 30 days).

Detailed explanation-5: -Liquidity Cover Ratio (LCR) requires a bank to maintain a certain stock of High-Quality Liquid Assets (HQLA) to help it weather a stressful period, like the financial crisis of 2008. It helps the bank stay afloat during a financial crisis, at least until the government or the central bank can come to its rescue.